CMHC Rules for Mortgage Loans with less then 20% down payment are changing in 2020! Effective July 1st 2020, CMHC rule changes will make it harder to qualify for CMHC Insured Mortgage Loans. This new CMHC (Canadian Mortgage and Housing Corporation) rule applies to first time home-buyers and anybody purchasing a new home with less than 20% down! Why now, and will this effect the amount you can borrow?
CMHC – Canada Housing and Mortgage Corporation has made the following rule changes to insured mortgages (less than 20% down):
- Decreasing the Gross Debt Service (GDS) ratios to 35% (from 39%
- Decreasing the Total Debt Service (TDS) ratios to 42% (from 44%)
- Raising the minimum credit score to 680 (from 600) for at least one borrower
- Banning non-traditional sources of down payment that “increase indebtedness” like borrowed down payment.
What about Gift money for a down payment when buying a home? Gift Money from family or friends etc. is still OK providing there is a gift letter that comes with that deposit and the deposit has been held in your bank account for 90 days or more. Using Inheritance money is still accepted. To be fully sure of what you can use for your down-payment be sure to call your mortgage broker or banker! You can even sell off some of your toys like a car a rv or boat and deposit that money into your bank account. You’ll need to have a bill or sale or receipt as proof of your sale, so keep your paperwork in order.
If you are currently in the market and shopping around for your first home make sure that you get a hold of your bank or a mortgage broker today. Timing is of the essence when it comes to all things real estate! You still have a few weeks to get pre-qualified before the new CMHC rules for July 1, 2020 become effective!
How much can you borrow and how much of a down payment will you need?
For CMHC-insured mortgage loans, the maximum purchase price of a home must be below $1,000,000. You will typically have a minimum down payment starting at 5%. For a purchase price of $500,000 or less, the minimum down payment is 5%. For a home purchase of over $500K you will require more money as a down-payment to be able to qualify. *Be sure to consult your bank account manager or mortgage broker for your specific qualification needs. CMHC will allow you to have more than one insured mortgage as long as you qualify. To avoid paying this type of mortgage, put a minimum of 20% as a down payment if you can afford to. You may be able to avoid CMHC insurance if you refinance your mortgage and leave at least 20% in the home.
Currently Genworth Canada (MIC) and Canada Guaranty (CG) confirmed they have not been told to adoptthe same underwriting changes although in the future they will eventually adopt some of the rules (e.g., down payment sources, credit score) or even all of the changes.
I have several mortgage brokers that I work with to help my clients qualify for their mortgages. If you would like that list please send me a email or call me today and I’ll gladly send the list over to you.
One other way you can help yourself qualify for your new home purchase is to find homes and condos with a recent price drop. A price reduction of just $5K could make the difference in you being able to purchase your first home or condo here in Victoria or Langford BC.
Where do you find properties with a price drop in Victoria?
Simple, just visit TroysDeals.com where you’ll find a daily updated list of Price Reduced homes and condos for sale here in Victoria from Sydney to Sooke BC.
If you’d like the list of price reduced properties in any area then please visit Troy’s deals.com and sign up for my email list. Once you’ve signed up for that list you’ll receive an email with the password which will allow you to login and view all the homes and condos in Victoria with the recent price! TroysDeals.com Updates every five minutes with information provided via the Victoria Real Estate Board!
BONUS! In the next few weeks all of the Price Drops on Vancouver Island will be added to this website! Oh and yes, this list also includes Foreclosure Listings!
👍If you’d like any more information please don’t hesitate to ask! TroyTheRealtor.ca and if you’re looking for any property in the Victoria MLS with a price drop you can find all of the current listings with a Price Drop at TroysDeals.com
Looking for Price Reduced Properties?
Select By Area – Price Changes and Price Drops updated every 5 minutes in Victoria, Victoria West, Oak Bay, Esquimalt, View Royal, Saanich East, Saanich West, Sooke, Langford, Metchosin, Colwood, Highlands, North Saanich, Sidney, Central Saanich, Gulf Islands, Malahat, Shawnigan Lake and Areas, Millbay and now includes FORECLOSURES!
Call or Txt Me Today @ 250.883.7676 and I’d be glad to help you find a home with a suite for sale in Langford BC and the Westshore!