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CMHC Reverses Changes Made to Underwriting

CMHC Admits mistake in changing their underwriting policies

Last year, in response to the economic uncertainty driven by the COVID-19 pandemic, CMHC unilaterally implemented temporary changes to its underwriting practices for mortgage loan insurance.

These measures included:

  • Limiting Gross Debt Service (GDS) ratios to 35% (from 39%)

  • Limiting Total Debt Service (TDS) ratios to 42% (from 44%)

  • Raising the minimum credit score to 680 (from 600) for at least one borrower

  • Banning non-traditional sources of down payment that “increase indebtedness”

They felt these changes would protect homebuyers, reduce government and taxpayer risk and support the stability of housing markets while curtailing excessive demand and unsustainable price growth.

However, their competitors Sagen & Canada Guaranty did not follow suit as anticipated. As such, CMHC lost a large part of their market share which has driven them to reverse their prior decision.

Effective as of July 5, 2021, they are returning to their pre-July 2020 underwriting practices for homeowner mortgage loan insurance, specifically:

  • CMHC will consider a Gross Debt Service (GDS) ratio up to 39% and Total Debt Service (TDS) ratio up to 44% for borrowers who have a strong history of managing their payment obligations.

  • At least one borrower (or guarantor) must have a credit score that is greater than or equal to 600 at the time of the request for insurance.

  • As always, CMHC will consider the overall strength of the mortgage loan insurance application, including alternative methods of establishing creditworthiness for borrowers without a credit history.




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