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CMHC Rules May Change 

Canadian Mortgage and Housing Corporation CMHC draws close to the agency’s limit on Lending

CNHC has $541 billion in insured mortgages under its books drawing close to the agency’s limit of $600 billion. As CMHC approaches it cap, it would start to make it harder to qualify. If you do not have at least a 20% down payment then your require insurance.

There are three types of borrowers that maybe hit the hardest and they are Self-employed, new to Canada immigrants and condo buyers. Self-Employed

Self-Employed people commonly expense as much as possible to lower their income for tax purposes. Therefore their true income may not be represented in their tax returns and self-employed borrowers can access CMHC-insured financing with 10% down payment through a Sated Income mortgage program. This may be tightening up because it has similarities to stated income subprime mortgage in the US despite being a much smaller segment of the market.

New to Canada immigrants who do not have a credit history and income history in Canada

In order to qualify new immigrants will have to provide references from their home county bank and credit card companies and obtain an international credit report or be denied coverage.

Condo Buyers

At present only 50% of the condo fee is used in the calculation in borrowing capacity using debt-to-income ratios. If the government were to tighten the rules they could use 100% of the condo fee in the debt-to-income ratio to limit the number of borrowers.

We do not know what Ottawa will do and they could simply increase the $600 billion mortgage insurance cap otherwise CMHC will have to take action to reduce the amount of mortgage insurance it issues.