Qualifying for a mortgage is about to get harder for anyone who doesn’t have at least a 20% down payment for the purchase of a home. Canada Mortgage and Housing Corporation (CMHC) is tightening its rules to qualify for an insured mortgage.
Starting July 1st, 2020, CMHC will be implementing the following changes:
- Establish minimum credit score of 680 for at least one borrower (up from 600)
- Limiting the Gross/Total Debt Servicing (GDS/TDS) ratios to standard requirements of 35/42
- Non-traditional sources of down payment that increase indebtedness will no longer be treated as equity for insurance purposes. In other words, buyers will no longer be able to borrow money for a down payment.
CMHC is also suspending refinancing for multi-unit mortgage insurance, unless the money is being used for repairs or reinvestment in housing.
At this time CMHC is the only insurer who has noted the implementation of these changes. So the question remains, will Genworth and Canada Guaranty follow suit or will they continue to be competitive?
Be sure to stay tuned..