New Mortgage Policies - Insured & Conventional Mortgages:
Qualifying Interest Rates for loans with a Loan To Value (LTV) greater than 80%
- For loans with a fixed rate term of less than 5 years and for all variable rate mortgages, regardless of the term, the qualifying interest rate is the greater of the benchmark rate and the contract interest rate.
- CMHC defines the benchmark rate as the Chartered Bank – Conventional Mortgage 5-year rate that is the most recent interest rate published by the Bank of Canada in the series V121764 as of 12:01 AM (Eastern Time) each Monday, and which can be found at: http://www.bankofcanada.ca/en/rates/interest-look.html
- For loans with a fixed rate term of 5 years or more, the qualifying interest rate is the contract interest rate.
- For mortgages with Multiple Interest Rates (e.g. Multi-Component Mortgages) each component must be qualified using the applicable criteria defined above.
The maximum amount Canadians can withdraw in refinancing their mortgages is reduced to 90 per cent from 95 per cent of the value of their homes.
CMHC Income Property
A 20 per cent downpayment is required for small (i.e. 1- to 4-unit) non-owner occupied residential rental properties. Mortgage Loan Insurance covering large rental properties, of 5 or more units, is not impacted.
Total Debt Service (TDS) Formula
- CMHC will also be implementing changes to the calculation of a borrower’s Total Debt Service Ratio where rental income is included in the calculation of household gross annual income.
- 50 per cent of the gross rental income from the subject property may be included into the borrower’s gross annual income for the purposes of calculating the borrower’s Total Debt Service Ratio.
- Previously 80 per cent of the gross rental income was deducted from the total household debt service cost to calculate the Total Debt Service Ratio.
- If using Rental income from all other rental properties the net rental income can be included in the borrower’s income and PITH for these properties can be excluded from the debt service costs.
CMHC Second Home
CMHC Second Home product will only be available for 1 unit owner occupied properties. Previously the property could have up to 4 units.
Changes to the Self Employed Simplified (SES) Program
Effective Friday April 9, 2010, changes have been made to the Street Capital Stated Income Program (Self Employed Simplified), insured by Canada Mortgage and Housing Corporation (CMHC):
- Purchases are only available up to 90% Loan-to-Value Ratio (LVR) (previously 95% LVR)
- Refinances are only available up to 85% Loan-to-Value Ratio (previously 90% LVR)
- Commissioned sales borrowers are no longer eligible for the CMHC Insured SES (Self Employed Simplified) program
- The borrower must have a minimum of 2 years experience in the same field. This can include time spent working as a non self-employed worker in the same field.
- Evidence of self employment documentation provided must confirm borrowers have been self-employed in the same business for less than 3 years and may be confirmed by providing any one of the following:
Sole Proprietorship or Partnership
* Business license
* Articles of Incorporation
For Historical Mortgage Rates Click here