CMHC criteria for insuring mortgages


Hi there guys, if you are in the market to buy a home and will be putting less than 20% down payment, then effective July 1st, Canada Mortgage Housing Corporation (CMHC), is revising it’s criteria for qualification of mortgages. Anytime one applies for a mortgage, one of the first things lending institution does is look at the debt services ratio, to compare how much of your income is going to pay off the debt. For the longest time, Gross Debt Services (GDS) ratio was sitting at 39, but as of July 1st, CMHC is reducing that to 35. Along with that, Total Debt Services (TDS) ratio, is being brought down from 44 to 42. As of July 1st, CMHC is increasing the minimum required credit score for at least one of the buyers on the mortgage application to 680. Lastly, the money you are going to put down for your down payment, can only come from your savings, investments or as a gift from family. You no longer are allowed to borrow money for your down payment. As I mentioned, these changes are only being implemented through CMHC, not the other two leading mortgage insurers in Canada. So if your mortgage is going to be through CMHC, please be aware, as of July 1st, your buying power will get reduced by almost 12%.

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