NEW RULES - First time home buyers

The Canadian Mortgage & Housing Corp. (CMHC) CEO, Siddall said the pandemic has exposed “long-standing vulnerabilities” in Canadian financial markets. The new CMHC rules will limit the debt exposure to first time home buyers by enforcing banks to bound to the standard 35/42 GDS (home mortgage, taxes and utilities, against the borrower’s pre-tax income) and TDS (car and credit card payments) used to assess mortgage loan applicants. Until now borrowers had been allowed to reach a 39/44 ratio. 

CMHC will also require at least one person on the mortgage to have a minimum credit score of 680, previously 620 and, it will no longer accept “non-traditional sources of down payments” that increase indebtedness such as unsecured personal loans or unsecured lines of credit as equity for insurance purposes. Most first-time home buyers use their savings, borrow from their retirement savings (RRSP) or receive gifts to finance their down payments.

New rules take effect July 1st, 2020.