New lending rules by CMHC have already took effect

In June, the Canada Mortgage and Housing Corporation introduced new lending standards, and on July 1, they already took effect.

In case you have enough money for your down payment, you have no reasons to worry, but if you’ve been planning to use a credit line for this purpose, you may want to think twice about it. CMHC will not accept non-traditional sources of down payment as equity.

In addition to it, the minimum qualifying credit score for potential homebuyers was raised from 600 to 680.

When the CMHC announced these changes, it pointed to a significant impact the global pandemic had on the real estate market.

“COVID-19 has shown us the long-standing vulnerabilities of Canada’s financial markets, so we have to act right now in order to protect the Canadians’ economic future,” – noted CMHC head Evan Siddall.

Moreover, CMHC suspends refinancing for most multi-unit mortgage insurances. The gross debt service ratio was reduced from 39% to 35%, and the total debt service ratio was cut from 44% to 42%.

Good news is that other 2 insurance companies Genworth and Canada Guaranty are not planning to change their rules at least for now, so clients would still have options in case they won’t fit into new CMHC guidelines.