The housing market needs stability during these uncertain times, and updating the rules for mortgage insurance is just one step in easing the burden on homeowners.
Effective July 1, 2020, CMHC implemented a new set of rules that effects the eligibility rules for mortgage insurance.
What are the new CMHC rules?
- Less debt as a percentage of gross income: All buyers will be limited to spending up to 35% of their gross income on housing, and can only borrow up to 42% of gross income once other loans are included.
- New minimum credit score: The new rules raise the minimum credit score to 680, meaning buyers will need a “good” credit score.
- No more borrowed down payments: Borrowers must provide the down payment “from their own resources”.
What are the new CMHC rules designed to do?
- Lower the amount of debt an applicant for an insured mortgage can carry.
- Set a higher credit score to qualify for CMHC insurance.
- Require a homebuyer to use their own funds for their down payment.
You can read more about the new rules on the CMHC site.
