Effective July 1, 2020 CMHC is making the following changes to insured mortgage financing (an insured mortgage is when you have less than 20% for down payment/equity):
- Reducing the debt servicing ratios from 39/44 GDS/TDS to 35/42 GDS/TDS (Gross Debt Service/Total Debt Service). In English, this means that you’ll qualify for approximately 12% less than you do today. For example, assume you make a 70K and currently qualify for a 350K mortgage, you’ll now only qualify for 308K.
- Increasing the minimum beacon score from 600 to 680.
- Eliminating the ability to borrow your down payment.
These are significant changes to qualifying. As such, if you’re looking to get into the market and have less than 20% down payment, there’s no time like the present.
As of now, our sources indicate that the other two insurers (Canada Guarantee and Genworth) will not be following suit, but time will tell…
Please reach out if you have any questions.