February 16, 2010

Jim Flaherty, Canada’s Minister of Finance, announced new lending guidelines for CMHC backed mortgage loans in an announcement earlier today.

The new rules are as follows:

1. All borrowers must qualify for a mortgage using the five year fixed rate regardless of the term chosen.  Example:  if you wish to take out a 1 year mortgage at 2.65% you will still need to qualify at the 5 year closed rage of 3.89%.

2. When refinancing a home, Canadians will only be able to refinance up to 90% of the value instead of the previous 95%.

3. If you want to purchase a revenue property, CMHC will no longer insure you.  You’ll need to put 20% down to take out a convential mortgage.

These changes come into effect April 19, 2010.

What HAS NOT change:
-> You can still purchase a property with 5% down!
-> You can still do a 35 year amortization!
-> You can still have GDS/TDS ratios up to 44% if you have a credit score over 680!

All information presented in this notice is believed to be true and accurate at the time of printing but is not guaranteed to be so.