Due to the Covid-19 pandemic, CMHC announced they will be tightening their mortgage underwriting rules as of July 1, 2020. Interestingly, Canada's two other mortgage insurance companies, Genworth and Canada Guaranty, will not be following CMHC’s lead, according to Canadian Mortgage Trends, which is good news for home purchasers.
Effective July 1, 2020, CMHC will apply the following rules to high-ratio mortgage loans (e.g. loans with less than 20% down payment):
- Limiting the Gross/Total Debt Servicing (GDS/TDS) ratios to their standard requirements of 35/42
- Establish minimum credit score of 680 for at least one borrower
- Non-traditional sources of down payment that increase indebtedness will no longer be treated as equity for insurance purposes.
- View CMHC new changes
As always, Contact Us if you have any questions or want the names of some great mortgage professionals.