July 1 2020

These changes are not that different than what we deal with today.

Effective July 1, the following changes will apply for new applications for homeowner transactional and portfolio mortgage insurance:

Limiting the Gross/Total Debt Servicing (GDS/TDS) ratios to our standard requirements of 35/42;

Establish minimum credit score of 680 for at least one borrower; and

Non-traditional sources of down payment that increase indebtedness will no longer be treated as equity for insurance purposes.

All lenders do not follow the rule of 600 Beacon Score for a mortgage application. The Lenders used CMHC Guidelines as Minimum Guidelines, the lenders are not forced to use those minimum guidelines.Most went with a 650 Credit score minimum. The TDS and GDS , for high ratio purchases ( less than 20% Down) mostly was 35/42. Most lenders used that as their limit. You did not qualify for the 39/44 unless your credit score was over 680.

The non traditional down payment issue is the Borrowing of the Down payment . I have not got the full scoop yet ,as some people borrow from a secured source like other real-estate owned and the cost of it is calculated into the application that CMHC is looking at. I will keep you posted!!!

This is more reason than ever to seek the advice of a Mortgage Broker!

Donna Mullen

Wasaga Beach, Collingwood, Meaford and Owen Sound.