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Only 3 Weeks Left! New CMHC Rules You Need to Know.

 
Only 3 Weeks Left! New CMHC Rules You Need to Know.

Posted: June 05 2020

Your Buying Power Drops 11% July 1st!

Effective July 1st, 2020 you will be approved for approximately 11% less of what you can be approved for today, due to new changes in CMHC mortgage approval rules. These changes will have a serious impact on how much you will be approved for. You can expect stricter requirements and less lenient approvals.
For example, if you are looking to purchase a home for $325,000 with a 5% down payment prior to the changes, your household income requirement is approximately $68,000. After July 1st, your approval will be approximately $290,000.

Before July 1st CMHC change: 
Purchase Price: $325,000 Down Payment: $16,250 (5%)
**Included as borrowed down**
After July 1 CMHC change: 
Purchase Price: $290,000 Down Payment: $14,500 (5%) 
**CANNOT be borrowed**


This is an 11%+ decrease in buying power!
This means if you require mortgage insurance, and you’re putting LESS than 20% down–it will be more difficult to get approved with the new rules for the home you want.

What changes?

  1. Your Credit Score Requirement: The minimum credit score requirement is increasing from 600, to a 680 beacon.
  2. Zero Down & Borrowed Down Payments: There will no longer be an optional borrowed or flex down payment option from lenders.
  3. Debt Servicing Ratios: A maximum debt servicing ratio requirement will be lowered from 44 to 42, and gross debt service ratio lowers from 39 to 35.
  4. Interest rates are expected to rise, which means it’s in your best interest to lock in a low interest rate before July!

Let’s cut to the chase, if you’re looking at new homes and plan to put less than a traditional 20% down–
The time to make your move is NOW!