CMHC Tightens Guidelines for High Ratio Mortgages
The following changes will be effective July 1, 2020
Maximum Gross Debt Services (GDS) drops from 39% to 35%
Maximum Total Debt Services (TDS) drops from 44% to 42%
At least one borrower on the application must have a minimum credit score of 680
Downpayment must be from a traditional source of downpayment (Savings, money from immediate family member)
Why did CMHC establish these new guidelines?
The changes made were based on their prediction that there will be a decrease in home prices varying from 9%-18%
Due to the negative consequences of COVID-19 such as job and home loss, it will help reduce risk for the insurer and home
How will a Home Buyer looking to apply for an Insured Mortgage?
Qualifying at Current Requirements GDS/TDS at 39/44
Downpayment: 5% ($17,500)
Mortgage Qualified For: $332,500
Maximum purchase price of $350,000
Qualifying at the New Requirements GDS/TDS at 35/42
Downpayment: 5% - ($15,500)
Mortgage Qualified For: $295,000
Maximum purchase price of $310,000
What does this mean?
Home buyers looking to qualify for an insured mortgage will have their borrowing power decreased by roughly 11%
Put in your offer before July 1 to secure your mortgage
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