CMHC Announces Policy Changes
As the saying goes, the only constant in life is change….
CMHC is making some changes to their underwriting guidelines, given the current environment, to mitigate taxpayer and government risk in the housing market effect July 1st:
Effective July 1st, CMHC has made the following underwriting changes:
- Non-traditional down payment sources (ie. borrowed funds) will no longer be allowed.
- The Minimum credit score for at least one borrower has to be 680 (up from the current 600).
- Income to debt ratios (the amount of your income that can go towards paying your mortgage/heat/taxes and other debt) will now be decreased to 35% / 42% (down from the current 39%/44%).
- Refinances on commercial, multi-unit residential properties the proceeds must now be used for betterment/improvement/repair of the subject property or for the purchase of another rental property.
So what does this mean to YOU?
For anyone purchasing with less than a 20% down payment these changes will decrease a borrowers affordability by roughly 12%.
Genworth and CG ( the other 2 insurers) have not announced if they are following suit as of yet. Update 06/09/2020 – Both Genworth and Canada Guaranty state they do not intend to follow suit:
CMHC states the changes are being made due to economic effects from COVID. CMHC press release can be found here.
The post CMHC Announces Policy Changes appeared first on Abbotsford & Chilliwack Mortgage Broker Lender.
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