The Canada Housing Mortgage Corporation (CHMC) has just announced upcoming changes to their qualifying criteria for new home buyers, starting July 1st, 2020. So what does this mean for you?
What is CMHC?
- CMHC is a Canadian government corporation
- They are one of three providers of mortgage insurance. Mortgage insurance is required when purchasing a home with less than 20% down payment
What are the changes?
- Credit score requirement increasing from 600 to 680 Beacon;
- Flex down mortgages are no longer available (no more zero down mortgages);
- Stricter Debt Servicing Requirements.
Is this affecting all mortgages?
- There are three primary mortgage insurers. At this time, only CHMC is applying these changes.
- This only applies to mortgages with less than 20% down payment (that are insured through CMHC)
What do these Changes Mean on a Practical Level?
- If you have a home that you are interested in, applying for a mortgage now will avoid these changes impacting you. You will need to be approved by the lender and insurer (CMHC) prior to July 1st in order to qualify under old rules.
- After July 2020, work closely with your mortgage professional to determine which mortgage insurer is best for you
- In the case that your mortgage insurer is CMHC, income requirements will increase. For a purchase of a $350,000 house with 5% down the requirement for income is $73,571.13, after the changes the requirement will change to $81,979.26. This will have a significant impact on income requirement.
If you are concerned that these changes will impact you, we strongly encourage you to act now before these new changes go into effect. Our Area Sales Managers at Pacesetter Homes are ready to answer any of your questions and find you a home suited to your lifestyle and budget, our show homes are open and you can make an appointment to get dedicated time to discuss your needs.