The New Mortgage Rules in Canada

Alyssa Furtado
by Alyssa Furtado June 21, 2012 / 7 Comments

Ottawa is announcing the fourth change to lending rules in as many years. Beginning July 9th, we’ll see the following changes to the mortgage rules:

  1. Maximum amortization period on high-ratio mortgages – those with a down payment of less than 20% – is now 25 years. For down payments of 20% or more, the maximum amortization period will be at the discretion of the lender and it is likely home buyers will still have access to 30 and 35 year amortization periods.
  2. No CMHC insurance on home prices over $1M. This means if you’re purchasing a home for $1,000,001, you have to be ready to put down 20% or $200,000. Looking at a home that is $1,000,000 however, you can get away with a down payment as low as $50,000.
  3. Maximum loan-to-value ratio on a refinance will be reduced from 85% to 80%. For loan to value ratios over 80% historically, additional CMHC fees were incurred so many refinancers never went past 80% to begin with.
  4. Maximum gross debt score and total debt score to 39% and 44% respectively.
***If an individual has mortgage lender approval before July 9, 2012, the latest the property can close is December 31st of this year.

The changes are an attempt to curb rising house hold debt and cool the overheated housing market. For more perspective visit:


  • TH says:

    Soooo…. I should hold off from buying a new home for a bit I’m guessing?

    • ratehub ratehub says:

      Hi TH,

      It all depends on what you can afford. Everyone’s financial situation is different. You can consult with a mortgage broker to see if it makes sense for you, their services are free.

      Best of luck

  • CB says:

    They say the effective date is July 9th. What does that mean. If I have already signed my Purchase Agreement & mortgage lender approval before July 9th but will have possession/closing by let’s say December of this year, will I be affected by the new rules?

    • ratehub ratehub says:

      Hi CB,

      That’s an excellent question. According to CMHC, if you have mortgage approval received before July 9th – the latest date you can close the property is December 31st, 2012.

  • Andrea says:

    We got apporved before July for building a home that will not be ready before Dec. We are now being said that with the new rules, our approval may be denied, but the house is being built and we are under contract to the builder. What can we do?

    • Jake says:

      Speak with your lender. It is my experience that the drop-dead date for when the closings must have happened under the old rules has already passed OR will pass by the end of this year. I highly doubt you will get any extensions on this from CMHC.

      Are you working with a broker or bank directly? If with a bank I suggest calling a broker because they will be able to source from various lenders, especially if the deal is “tight” in terms of qualifying.

      Do you not qualify under 25 year amortization? Are you going variable? If going variable or LESS THAN 5 years term, you’re qualifying at a much higher rate. Perhaps going fixed will solve this problem.

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