CMHC Announces Changes to Mortgage Insurance Underwriting and Acceptance Criteria
Below is an important announcement from CMHC that will affect the buying power of high-ratio buyers and therefore the ability of mid priced sellers. A high ratio buyer is someone with less than a 20% down payment/under 1 million purchase price. While this may not be the price of your existing home, or even in the wheelhouse of your next purchase… every amendment to borrowing power has a trickle down or up effect to the market. The banks are dropping their qualifying ratios from 39 GDS/44 TDS to 35 GDS/42 TDS. The 4% drop in GDS will have a noticeable difference in what clients will qualify for as the GDS is the housing debt ratio – a percentage of debt covering housing costs based off an applicants gross income.
These rules have not been changed with the other 2 insurers yet, so time will tell if they adjust as well or if they stick with their current guidelines. If you would like to discuss how this might effect your purchase or sale, please do not hesitate to get in touch. I am happy to have a zoom chat or an in person visit (which ever is the most comfortable for you)
I hope you’re keeping well during these interesting times.
- Patrick