No more 40 year mortgages and 100% financing!
On July 9 2008 the federal government announced that effective October 15 2008 government-backed mortgages (those with less than 20% down) through CMHC and the private mortgage insurers will have these restrictions;
- No more 40 year amortizations. The maximum amortization period will now be 35 years.
- No more 100% or 97% financing. The minimum down payment will now be 5%.
- The establishment of a minimum credit score requirement. It will be 620.
The finance department says the motivation for these changes is "...to ensure Canada's housing market remains strong and to reduce the risk of a U.S.-style housing bubble developing in Canada." Read into that "We don't want our own canadian-created 'sub-prime-like' mess."
Edit/Addendum:
Here is the official press release: http://www.fin.gc.ca/news08/08-051e.html
And here is the "Backgrounder", which has all the official details: http://www.fin.gc.ca/news08/data/08-051_1e.html
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