Effective July 5, 2021, the following changes will apply for new applications for homeowner transactional and portfolio mortgage insurance:
- Limiting the Gross/Total Debt Servicing (GDS/TDS) ratios to our standard requirements of 39/44;
- Establish minimum credit score of 600 for at least one borrower; and
- Non-traditional sources of down payment that increase indebtedness will no longer be treated as equity for insurance purposes.
For CMHC-insured mortgages, these new criteria will take precedence over the Government of Canada's mortgage insurance guarantee parameters below.
This is the second information update implementing new parameters for mortgage loan insurance announced by the Government of Canada on October 3 and updated on October 14, 2016.
The earlier update dealt with the application of the Mortgage Rate Stress Test applicable to high ratio loans. This information update deals with new eligibility criteria for low ratio loans where the loan-to-value ratio is 80% or less.
Eligibility Requirements where the Loan-to-Value Ratio is 80% or Less
Effective November 30, 2016, transactional low ratio loans must meet seven new eligibility requirements. The additional requirements are as follows:
|Loan Purpose||Purchase of a residential property. No Refinance.|
|Maximum Amortization||25 years from when the loan was originally made|
|Maximum Purchase Price||Less than $1,000,000|
|Variable Rate Loans||For variable-rate loans that allow fluctuations in the amortization period, loan payments that are recalculated at least once every five years to conform to the established amortization schedule.|
|Credit Score||At least one borrower (or guarantor) must have a minimum credit score of 600.|
|Debt Service Ratios (GDS/TDS)||Max 39% / 44% calculated by applying the greater of the mortgage contract rate +2% or the Bank of Canada conventional five-year fixed posted rate.|
|Occupancy||If the property is a single unit, it will be owner occupied.|
The eligibility requirements also apply to transactional low ratio loans received by CMHC before November 30, 2016. To determine if the new low ratio eligibility requirements apply, please refer to the table below:
|Before October 17||
New eligibility requirements do not apply where one of the following
|October 17 to November 29||
New eligibility requirements do not apply if one of the three above
criteria is met and the loan is funded before May 1, 2017.
If the loan is to be first funded on or after May 1, 2017, the new eligibility requirements apply.
|November 30 onwards||The new eligibility criteria apply.|