Government guarantee parameters

For 1-4 Unit properties.

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Maximum Amortization	25 years from when the loan was originally made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 applies: CMHC received an application to insure the loan; or The lender had already made the loan or made legally binding commitment to make the loan; or The borrower entered into a legally binding agreement of purchase or sale for the property against which the loan will be secured.
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.