canada mortgage cmhcThe Finance Department of the Government of Canada announced on July 9 that they are changing the rules regarding government guaranteed mortgages (aka insured, or “high-ratio”, mortgages) which they say aim to at protect and strengthen the Canadian housing market.

The new measures include:

  • No more 40 year amortizations. The maximum amortization period for new government-backed mortgages will be 35 years;
  • No more 100% financing on new government-backed mortgages – the minimum down payment will now be 5%;
  • Establishing a consistent minimum credit score requirement, which will be 620;
  • Setting a maximum of 45 per cent on borrowers’ Total Debt Service (TDS) ratio.

The new rules are to take effect October 15, 2008 and will apply to all CMHC mortgages.

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.”

See the Finance Department press release here.