Effective July 1, 2020, CMHC will be implementing the following rule changes for mortgage insurance and Buyers under 20% downpayment:
Income to debt ratios will be REDUCED from the following:
- Gross debt servicing from 39% to 35%
- Total debt servicing ratio from 44% to 42%
The reduction in debt ratios (maximum you can spend of your income on a home) has the potential to lower your affordability by over 10%
Minimum credit score is being INCREASED from 600 to 680
Non-traditional sources of down payment which will increase indebtedness will no longer be treated as equity for insurance purposes (i.e. using a secured line of credit for a down payment)
courtesy: Kelly Hudson Mortgages