Government announces four changes to Canadian mortgage insurance rules

The Canadian government formally announced changes to mortgage insurance  rules which will take effect on July 9, 2012 for new mortgages originated.

There are 4 changes in total regarding  government-backed insured mortgages:

  1. The maximum  amortization period is reduced to 25 years from 30 years;
  2. The maximum refinancing loan-to-value is reduced to 80% from 85%;
  3. The maximum debt service ratios are capped at 39% for the gross debt service ratio and 44% for the  total debt service ratio; and
  4. Government-back insured  mortgages will only be available for mortgages on homes with  purchase prices under $1 million (previously no  limit).

NOTE:  These changes only apply (thus far) to CMHC insured mortgages (mortgages greater than 80% of the value of the home).

 

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