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CMHC announces tighter requirements for approvals beginning July 1, 2020

The Canada Mortgage and Housing Corporation (CMHC) announced mortgage default insurance rule changes this week that will impact home buyers using their service in three significant ways.

This two-minute video provides an overview of how the new rules, effective July 1, 2020, apply. 



Transcript

When you purchase a primary residence in Canada with a down payment of less than 20%, you're required to purchase mortgage default insurance through one of three Canadian providers that offer service in Canada, CMHC being the most prominent of those.


This week, CMHC announced some changes that are coming July 1 to their program, and I had an opportunity to talk with Tyler Hildebrand at oneSt. Mortgage yesterday, and he's brought me up to speed on those changes.


The most significant of the three is the change to the debt-service ratio. That is the percentage of your income that the lender will allow you to spend on mortgage service, property taxes, and heating. Prior to July 1, CMHC's limit is 39% of your gross income. That's gonna drop to 32%. That's gonna affect your buying power by roughly 10%. So a $400,000 house pre-July 1, 360 afterward.


The second change that's also fairly significant is at least one buyer on the application, the mortgage application has to have a credit score of 680 or higher. A credit score is a number that a credit bureau puts together based on your past performance in repaying your debt, and perhaps the amount of debt that you're carrying now. You're definitely gonna wanna revisit your mortgage broker and find out if your preapproval is still good because this is gonna affect a lot of people.


Finally, they're eliminating the ability to borrow any portion of your down payment. You previously could put some portion of your down payment on a secondary line of credit, and you can no longer do that with a CMHC-approved loan after July 1.


There are still two other mortgage insurance providers in Canada; no details on whether or not they'll follow suit. But as for CMHC, effective July 1, those are the new rules.


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I’m always happy to answer your Saskatoon real estate questions.  Reach out by voice or text at 306-241-6676 or email me at norm at teamfisher.com


Norm Fisher

Royal LePage Vidorra

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Norm Fisher, Author of the TeamFisher Saskatoon Real Estate Blog

About Norm

Licensed in 1993, Norm brings a wealth of experience to TeamFisher. He has worked in every imaginable capacity including sales agent, office manager, team leader, broker and now, broker/owner. Norm has written a weekly review of the Saskatoon real estate market for more than 650 consecutive weeks which may make him the most consistent industry blogger in the world.Less...

Licensed in 1993, Norm brings a wealth of experience to TeamFisher. He has worked in every imaginable capacity including sales agent, office manager, team leader, broker and now, broker/owner. Norm has written a weekly review of the Saskatoon real estate market for more than 650 consecutive weeks which may make him the most consistent industry blogger in the world.

Norm is known for his passion for technology and can most often be found exploring and experimenting with the next big thing in real estate marketing. He was the first Saskatoon real estate agent to promote a home online and has been an early adopter of new technologies ever since. “Everything about this business has changed over the past 20 years, and it will happen again in the next ten. An open mind and a curious attitude are all that’s needed to continue to find new ways to serve our clients by delivering a faster, smoother, worry-free transaction,” says Norm.

In his spare time, Norm enjoys Crossfit and cycling, some years accumulating over 2,000 kilometres on the road. He’s a strong supporter of the Royal LePage Shelter Foundation and enjoys raising funds by joining fun, fitness-related initiatives like the Grouse Grind for Shelter. In 2015, he trekked the Peruvian Andes to Machu Picchu. In 2017 he walked the southern highlands of Iceland across mountains, sand, snow, ice, lava fields and forest for seven days. Collectively those initiatives raised over a million dollars for Canadian women's shelters.
 

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