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The government-backed Canada Mortgage and Housing Corp stated it would tighten rules for offering mortgage insurance from July 1.
The move would make it harder if you are high risk borrower looking to buy a home in Canada.
CMHC is establishing a minimum credit score of 680 instead of the current 600.
It will also limit total gross debt servicing ratios to its standard requirement of 35 per cent of annual income, compared with a threshold as high as 39 per cent currently, and total debt servicing to 42 per cent versus as much as 44 per cent now.
The change to the debt service ratio will have the biggest impact of the three changes.
That's because under the current gross debt service ratio cap of 39 per cent, a family with an annual income of $100,000 and a 10 per cent down payment would have qualified to buy a home valued at up to $524,980. Under the new rules, that same family can only get approved to buy a home worth $462,860 — a reduction of 12 per cent.
Minimum downpayment however remains unchanged which is from 5% to 20%.
Despite COVID-19 pandemic, house prices have continued to rise for houses in Toronto and elsewhere, although number of listings have reduced.
If you have low credit score, zero downpayment, Lucky Arul Homes can help you with our expertise and knowledge and help you find your dream home. For details, call us anytime at 416 518 9782 or leave a message below!
The move would make it harder if you are high risk borrower looking to buy a home in Canada.
CMHC is establishing a minimum credit score of 680 instead of the current 600.
It will also limit total gross debt servicing ratios to its standard requirement of 35 per cent of annual income, compared with a threshold as high as 39 per cent currently, and total debt servicing to 42 per cent versus as much as 44 per cent now.
The change to the debt service ratio will have the biggest impact of the three changes.
That's because under the current gross debt service ratio cap of 39 per cent, a family with an annual income of $100,000 and a 10 per cent down payment would have qualified to buy a home valued at up to $524,980. Under the new rules, that same family can only get approved to buy a home worth $462,860 — a reduction of 12 per cent.
Minimum downpayment however remains unchanged which is from 5% to 20%.
Despite COVID-19 pandemic, house prices have continued to rise for houses in Toronto and elsewhere, although number of listings have reduced.
If you have low credit score, zero downpayment, Lucky Arul Homes can help you with our expertise and knowledge and help you find your dream home. For details, call us anytime at 416 518 9782 or leave a message below!