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Recent Changes to Qualification Rules for CMHC-Insured Mortgages

Effective April 19, 2010, the federal government has implemented new measures aimed at bolstering stability in the housing market and encouraging home ownership for Canadians, by changing the rules relating to government-backed mortgages insured by the Canada Mortgage and Housing Corporation (CMHC).
 
Primary among the changes is a new requirement that all borrowers must meet the standards for a five-year fixed rate mortgage, even if they choose a mortgage with a lower interest rate and shorter term.  (This addresses longer-term housing market stability by preparing homeowners for higher interest rates in the future).  Specifically:

In light of these requirements, CMHC will no longer offer insurance for mortgages which fall outside the defined parameters.
 
The changes imposed by the federal government also include the following:
 

In response to these government initiatives, CMHC has also implemented changes affecting borrowers who own rental income properties, in terms of how their total debt service ratio is calculated.   Also, both self-employed borrowers with more than three years in the same business, and all commissioned-income borrowers are now subject to new requirements in connection with providing income validation as part of qualifying for CMHC-insured mortgage loans.  Income validation can be provided through financial statements, contracts, T4 forms, and other third-party sources.