CMHC, Canada’s largest mortgage insurer for high ratio applications, is tightening their guidelines which will affect what individuals will be able to borrow. Currently if the main borrower has a beacon score of 680 and above, the GDS and TDS ratio maximums were 39% and 44%. As of July 1/2020, no matter what the beacon score is, the maximums are decreasing to 35% and 42%. As well, they previously had a minimum beacon score requirement of 600 for one of the borrowers, that had been increased to 680. Finally, down payment obtained through debt can no longer be used.
The good news is that they are keeping their 5% down payment product. In 2019, two out of three first time homebuyers required mortgage insurance. These changes may force buyers to come up with at least 20% down payment. This will definitely affect the housing market as those wanting to get into the housing market will find it more difficult. The other two mortgage insurers in Canada have not followed suit, yet.