Higher credit scores, lower debt ratios and no borrowed down payments for insured mortgage Canada's national housing agency is tightening its requirements for getting an insured mortgage starting next month.
The move would make it harder for riskier borrowers, who offer downpayments of less than 20 per cent to access CMHC's default mortgage insurance. CMHC is establishing a minimum credit score of 680 instead of the current 600, the group said in an emailed statement.
It will also limit total gross debt servicing ratios to its standard requirement of 35 per cent of annual income. compared with a threshold as high as 39 per cent currently. and total debt servicing to 42 per cent versus as much as 44 per cent now.
Under the current gross debt service ratio cap of 39 per cent. a family with an annual income of $100,000 and a 10 per cent down payment would have qualified to buy a home valued at up to $524,980, Under the new rules, that same family can only get approved to buy a home worth $462,860 — a reduction of 12 per cent.