As we have all witnessed in the last couple of months, the Canadian economy, including housing and countless other sectors have been greatly affected by the COVID-19 pandemic.
The Canada Mortgage and Housing Corporation (CMHC) is bringing in the following changes to limit their assumed risk by changing policies for Insured Mortgages (when someone is buying with LESS than a 20% down payment).
Effective July 1st, 2020 the CMHC will be making the following changes:
- CMHC is lowering the percentage of your income that can go towards paying your mortgage / taxes / heat from 39% to 35%.
- Establish a minimum credit score of 680 for at least one borrower. (previously 600)
- Non-traditional sources of down payment that increase indebtedness will no longer be treated as equity for insurance purposes.
What does this mean for you?
- The average consumer who has less than 20% down will now have their max purchase price reduced 12%.
- Your credit score must be higher.
- You will no longer be allowed to borrow your down payment. (Gifted funds from family is still ok)
If you or anyone you know have questions regarding these new changes and how it applies to your own personal situation please reach out to our team. We want to inform, equip, and help you navigate these new changes.