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CMHC Changes Could Impact Buyer's Purchasing Power

Updated: Aug 5, 2020

Vancouver Home Buyers Facing More Financing Challenging
CMHC Changes to Impact Some Vancouver Home Buyers

Come July 1st, 2020, CMHC will be initiating some significant changes to their mortgage underwriting criteria that are designed to "protect Canada's economic future' by reducing what they are calling financial vulnerabilities.

These changes include:

  • Limiting Gross Debt Service (GDS) ratios to 35% (from 39%)

  • Limiting 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”

The overarching assumption is that this will reduce buyer's purchasing power by about 11% on average. 

For more information, you can read the press release from CMHC here. I'm also happy to pass on some names of qualified mortgage brokers if you are looking for assistance finding your best financing options. You can get in touch here if that is the case.

UPDATE: Canada’s two private sector providers of mortgage default insurance have stated that they WILL NOT follow the lead of CMHC and implement of stricter qualifying criteria. Genworth Canada says that it will not be rolling out any changes to its underwriting policies in response to CMHC's announcement and Canada Guaranty also clarified that is will not be contemplating any changes in this regards.


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