Jim Flaherty, Canada’s Minister of Finance announced new lending guidelines for CMHC backed mortgage loans in an announcement earlier today.
The new rules are as follows:
1. All borrowers must qualify for a mortgage using the five year fixed rate regardless of the term chosen. As an example, if you wish to take out a 1 year mortgage at 2.65% you will still need to qualify at the 5 year closed rate of 3.89%.
2. When refinancing a home, Canadians will only be able to refinance up to 90% of the value instead of the previous 95%.
3. If you want to purchase a revenue property, CMHC will no longer insure you. You’ll need to put 20% down and take out a conventional mortgage.
These changes come into effect April 19th 2010.