new-canada-mortgage-rules

Effective July 1, first time home buyers will be able to afford at least 10% less house!

If you’re a first time home buyer, wanting to get into the market, act quick!

The changes are the following:

1. Limiting the GDS/TDS ratios to 35/42 from 39/44,

2. Making sure at least 1 borrower has a 680 credit score, and

3. Non-traditional sources of down payment will no longer be treated as equity for insurance purposes.

*Either borrowed down is now being banned and/or this will increase insurance costs more for borrowed down clients. Affordability Decreases 10%…

Let’s take a $500,000 purchase with $50,000 down payment. The mortgage would be $463,950 (after $13,950 in CMHC fees).

Right now, we’re looking at needing an income of $93,300 to purchase this property at a GDS requirement of 39%. (Property tax at $1,800, condo fees $300, heating at $50.)

This income required increases to $103,970 in order to purchase the same property.

So, this is a 10.3% increase in the requirement of income.

Alternatively, a $93,300 income would provide for a purchase of $447,000. Or, just 10.6% less.

ADVICE: Talk to broker, get more details, skip banks, Build Relationships with local Credit Unions ….