Mortgage Guidlines Tighten Up!

According to the Financial Post, the government of Canada is going to make it just a little more difficult to qualify for a mortgage. Buyers are no undoubtedly taking advantage of record low-interest rates to acquire a home.

  • It is going to be harder for first-time buyers in the way of qualifying for government-backed housing Insurance from either Canada Home Mortgage Insurance (CMHC) or private sector which is required if the down payment is less than 20% of the purchase amount. What exactly does all that mean? It means the average income required to qualify for a home after April 18, 2010, will be $5,000-$8,000 higher.

Not a first-time buyer but planning to invest in your retirement portfolio? After April 18, 2010, be prepared to put 20% down instead of the former 5% required before the deadline.

Why? The government is trying to protect Canadians from overextending themselves as interest rates climb from the presently historical lows.

Quick Reference on how this could affect you:

  • Borrowers must qualify for a 5 year fixed rate term instead of the previously accepted 3yr loan when calculating Gross Debt Service Ratio. Refinancing will be capped at 90% for government-backed high-ratio mortgages