CMHC Tightens Mortgage Rules

Canada Mortgage and Housing Corporation (CMHC) announced yesterday, June 4th, they will be implementing new changes to their lending policies that will take effect July 1, 2020.

Below are some of the updates I’ve collected so far…

• Limiting Gross Debt Service (GDS) ratios to 35% (from 39%)
• Limiting Total Debt Service (TDS) ratios to 42% (from 44%)
• Raising the minimum credit score to 680 (from 600) for at least one borrower
• Borrowers must pay the down payment from their own resources. Examples of the acceptable down payment may include savings, the sale of a property, non-repayable financial gift from a relative, funds borrowed against their liquid financial assets, funds borrowed against their real property, or a government grant.

Essentially, the changes will effectively reduce homebuyers’ purchasing power by up to 11% after July 1st, 2020.