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What the July 9th CMHC changes mean to you if you are planning to buy housing soon:

What the July 9th CMHC changes mean to you if you are planning to buy housing soon:
Bottom line, your purchasers will now qualify for less mortgage if their down payment is 5 or 10% of the purchase price.

Example – impact of changes for your purchaser with less than 20% down payment.

$300,000 mortgage, currently the borrowers income should be approximately $37,000 to qualify.
$300,000 mortgage, as of July 9th income should be $44,600 which is about 20% more income needed to qualify.

So a purchaser with an income of $37,000 will now qualify for a mortgage of about $250,000 instead of $300,000.

Purchasers (change details)

The changes apply to CMHC insured mortgages.

For a down payment of less than 20% (of the purchase price) the maximum amortization is 25 years. Previously it was 30 years.
A 5% down payment is still acceptable.

30 year amortizations may still be available at the lenders discretion if the down payment is 20% or more.
Properties with a purchase price of $1 million or more must have a minimum 20% down payment.
Borrowers must income qualify using a 39% GDSR. Which means their mortgage payment, property tax payment and heat (plus 1/2 the condo fee if the property is a condo) should not exceed 39% of the borrowers income before deductions (gross income before income tax, CPP, UI, etc deductions)
The TDSR is still 44% (GDSR plus loan, card, line of credit payments)
Refinance (increasing a mortgage on a property you own)

Maximum mortgage amount is now 80% of the appraised value. Which means CMHC is not insuring refinances.

Mortgage rates have remained stable during the summer. Qualifying for a mortgage has tightened up, so it is best to obtain a reliable mortgage pre-approval before you showing properties. A pre-approval will save agent and clients disappointment.
Current Rates 2.69% for a 2 year fixed rate (from a bank) 3.04% 5 year fixed rate (non bank lenders) 3.19% 5 year fixed rate (from a bank) 3.89% 10 year fixed rate (non bank lender)
2.65% 5 year term variable rate, prime minus 0.35% (non bank lender)
Most of the above special rates are only available with an agreement of purchase and sale. Rates for mortgage pre-approvals are a bit higher but can be discounted when an offer to purchase is made.

for more info or if you have a question please email or call

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