It's Time: A Vacation or Second Home
As your family grows, so do your needs. We can take weeks off the process, all for the lowest rate and great terms! With lifestyle demands, a second home in the city to reduce that weekly commute, or a cottage at the lake for weekend getaways can be very appealing. In 2003, CMHC and Genworth introduced a product to make this process more feasible - with as little as 5% down!
Acceptable Loan Purpose
- Secondary homes (Type A) available for purchase and refinance
- Vacation homes (Type B) available for purchase only
- 30/35 - year amortizations available on Secondary (Type A) Homes 30/35 - year amortizations not available on Vacation (Type B) Homes
*The program does not provide for the purchase of investment, rental pool or timeshare properties; therefore, incidental rental income will not be used for qualification purposes.
Eligible Properties (Refer to the Property Type Schedule)
Secondary Homes (Type A Properties):
- Maximum loan amount: - Metro Toronto, Metro Vancouver and Metro Calgary - $700,000; rest of Canada - $600,000
- Available for purchase and refinance
Vacation Homes (Type B Properties):
- Property characteristics same as Type A properties except for the following;
- Property need not be winterized
- May have seasonal access (road not ploughed during winter)
- Maximum loan amount: $350,000 (exceptions will be considered on a case by case basis)
- Available for purchase only
Loan-to-Value Ratio Limits
'Loan-to-value' (LTV) is the relationship between the principal balance of a mortgage and the property value. For example, if you have a house valued at $100,000 with a $90,000 loan, you have a 90% LTV ($90,000 divided by $100,000 = 90%).
- For A properties, the maximum LTV is 95%
- For B properties, the maximum LTV is 90%
Borrower Qualifications
- Borrower Qualifications
- Maximum TDS: 44%
- Lenders require a minimum credit bureau score of 680 on all applicants.
- No prior bankruptcy or judgements
- No late payments in the last 24 months
- Maximum of one insured vacation property per applicant
- No 3rd party guarantors for qualification purposes. Lenders do accept spousal guarantors
- Lenders do not allow gifted down payments under this program
Document Requirements
- Offer to purchase
- Employment/income verification
- Verification of down payment
Appraisal Requirements
Turnaround times in this program are outside the standard purchase business levels. Property specifications
Type A Property:
- Foundation must be permanent and installed beyond the frost line. This includes concrete/concrete block or preserved wood foundations certified by a professional engineer or post/pier foundations on solid bedrock
- Must be zoned and used as residential, rural or seasonal. Lenders do not accept mixed uses or rental pooling
- Freehold or condominium title. Lenders do not accept co-ops or ? interest ownership
- At minimum, property must have a kitchen, 3-piece bathroom, bedroom, and common area
- Must have a remaining economic life of at least 5 years more than the mortgage amortization period
- Year-round road access on reasonable quality public roads, serviced by the local municipality. Lenders also allow privately serviced roads, provided there is a maintenance contract in place
- Property must be winterized with a permanent heat source. For example, heating can be baseboard, forced air, water radiator, radiant, coal, propane, geothermal heat pumps, or heat pumps
- Good quality construction with no signs of deferred maintenance
- Water source: well, municipal serviced, and cistern. Water source must be drinkable. Lenders accept lake or river water, provided the property has its own filtration system. For example, a reverse osmosis system
- There must be good market appeal in the area with no adverse influences/neighbourhood nuisances
Type B Property:
All Type A property requirements apply to Type B, except for the following:
- No permanent heat source is required. For example, a wood stove, fireplace, stove or heat blower is acceptable
- Foundation may be floating. For example, sitting on blocks
- Seasonal road use is acceptable. This means the road does not have to be plowed during the winter
- Water source needn't be drinkable. However, there must be running water in the home
- Property may be accessible only by boat
