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CMHC Tightens Guidelines for High Ratio Mortgages

What's Happening?

  • The following changes will be effective July 1, 2020

  • Maximum Gross Debt Services (GDS) drops from 39% to 35%

  • Maximum Total Debt Services (TDS) drops from 44% to 42%

  • At least one borrower on the application must have a minimum credit score of 680

  • Downpayment must be from a traditional source of downpayment (Savings, money from immediate family member)


Why did CMHC establish these new guidelines?

  • The changes made were based on their prediction that there will be a decrease in home prices varying from 9%-18%

  • Due to the negative consequences of COVID-19 such as job and home loss, it will help reduce risk for the insurer and home



How will a Home Buyer looking to apply for an Insured Mortgage?

  • Qualifying at Current Requirements GDS/TDS at 39/44

  • Income: $70,000

  • Downpayment: 5% ($17,500)

  • Mortgage Qualified For: $332,500

  • Maximum purchase price of $350,000

  • Qualifying at the New Requirements GDS/TDS at 35/42

  • Income: $80,000

  • Downpayment: 5% - ($15,500)

  • Mortgage Qualified For: $295,000

  • Maximum purchase price of $310,000


What does this mean?

  • Home buyers looking to qualify for an insured mortgage will have their borrowing power decreased by roughly 11%

  • Put in your offer before July 1 to secure your mortgage

  • Feel free to compare My Rates to other banks

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1665 Kingsway, Vancouver BC, V5N 2S2

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