CMHC Drops 100% Financing and 40-Year Amortizations
BREAKING NEWS
This will be a big surprise to many. The Department of Finance has just announced that it will no longer back the following:
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- 100% financing (5% will now be the minimum downpayment on an insured mortgage)
- 40 year amortizations (35 years will be the new maximum on insured mortgages)
The government will also require the following with all new mortgages it backs:
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- A new 620 minimum credit score requirement
- 45% maximum TDS ratio
- New loan documentation standards
The new rules will take effect October 15, 2008. This affects CMHC insured mortgages as well as mortgages insured by Genworth, AIG, etc. Insured mortgages are generally those with less than 20% down. Certain conventional mortgages are also insured, however.
In a statement earlier today, the Department of Finance said, "Today's announcement marks a responsible and measured approach by the Government to ensure Canada's housing market remains strong and to reduce the risk of a U.S.-style housing bubble developing in Canada."
These new rules pertain only to new, government-backed insured mortgages. This will not affect existing mortgages.
The key to this at this time is that the change takes place on October 15, 2008.
your Coquitlam, Port Coquitlam, Pitt Meadows, Maple Ridge and surrounding areas Realtor
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100% and 40 year loans, that's unheard of in Ohio!
Christina