Canada Mortgage and Housing Corporation (CMHC) has announced some changes that will take place July 1, 2020.
These changes include limiting Gross/Total Debt Service (GDS/TDS) to 35% and 42% respectively. The minimum credit score required for at least one buyer is being raised from 600 to 680. Additionally, you will no longer be able to borrow your down payment or part of it from such things as your Line of Credit or any other source that increases your indebtedness.
What this means is that if you are buying a home with less than 20% down after July 1, you will need to owe less money, have better credit, and have your down payment effectively in the bank.
In speaking with a few of the mortgage specialists I work with, my understanding is the net result will be you have 10-12% less purchasing power.
Keep in mind these changes only apply to those putting down up to 20% and require an insured mortgage. For those putting down more than 20% and getting an uninsured mortgage...carry on!
The good news is this move is only being made by CMHC at this time. I am sure we will hear soon if the alternative insurers will be making similar changes.
If you would like further clarification, feel free to contact me at 604-880-6419 and I will put you in touch with a mortgage specialist.
This may be your time to buy! If so, I can definitely help you with that.