Question:
With the new CMHC changes are we allowed to get pre-approved at 5% before April 19th but not purchase until after this date? Are any banks or credit unions flexible on these dates?
Answer: Friday, April 09, 2010
Thank you for your email question regarding the New CMHC mortgage rule changes.
CMHC will no longer offer insurance for mortgages falling outside the scope of the new parameters after April 19, 2010:
Investment Property
The answer to your question is NO you will not be able to buy an investment property, insured by CMHC, with 5% down after April 19th 2010. You must have a down payment of 20% for the purchase of an investment property after April 19th 2010.
Principal Residence
The answer is YES you will be able to buy a residence with 5% down after April 19th 2010.
Flexibility by Banks/Credit Unions
CMHC and the Federal Government make the rules. The Banks and Credit Unions have no choice but to follow the rules set out by CMHC.
Qualifying with Rental Income
CMHC will also be implementing changes to the calculation of a borrower's Total Debt Service Ratio where rental income is generated from the subject property. Effective April 19, 2010, 50%, not 80%, of the gross rental income from the subject property may be included into the borrower's gross annual income for the purposes of calculating the borrower's Total Debt Service Ratio (TDS). TDS is the percentage, up to 42%, of gross annual income required to cover payments associated with housing and ALL other debts.
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