On July 1, 2020 CMHC implemented changes to high ratio mortgages purchases/mortgages that have less than a 20% down payment) and I have had a number of clients and realtors alike, call quite concerned about moving forward or even qualifying under these new rules.
In a nutshell, CMHC’s new policy for insured mortgage was an increase in the borrowers’ credit score from a minimum of 600 to 680, a reduction in the sources of the down payment and the ratio of debt to income was being reduced regardless of credit score.
This new policy had the potential of cutting the purchasing power of many home buyers by up to 11% For example, a household income of $100,000, with a 5% down payment (not including any other debts) would qualify for approximately $320,000. Under CMHC’s new guidelines, that mortgage would be reduced to about $280,000. While most people are at least somewhat familiar with or heard of CMHC, many Canadians are not aware that CMHC is just one of three mortgage insurance companies. While CMHC is the most generally known, and is a federal Crown
Corporation, there are also 2 private insurers, Genworth Canada and Canada Guaranty who are not following CMHCs lead and are both quite confident in the Canadian market. So it’s business as usual moving forward.
As always, any questions on mortgages, feel free to reach out for a no-obligation
TMG – The Mortgage Group