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CMHC Introduces New Mortgage Rules

How the changes, effective July 1, may affect your home buying journey. 

July 17, 2020  4 minute read

Are you in the market for your first home? If you plan to apply for a mortgage through the Canada Mortgage and Housing Corporation (CMHC), there’s some new rules to keep in mind, effective July 1st, 2020.   

Here’s what to know:

  • CMHC will no longer allow you to use borrowed funds for your down payment (gifts are fine if you don’t have to pay them back)
  • The minimum credit score has increased from 600 to 680
  • There a lower threshold for how much debt you can carry (from 45% to 42% for total debt service ratio) 

According to, CMHC’s new debt-ratio policy will cut homebuyers’ purchase power by up to 11%. For example, someone earning $60,000 with no other debt and 5% down could afford approximately 10.9% less home under CMHC’s new rules.

Here’s what you can do:

  • Increase your savings - The tightened rules mean you can’t use unsecured personal loans, unsecured lines of credit and credit cards to save a down payment.  Why not build your savings through a One Grand Plan savings account? There’s never been a better time to learn how to save more and spend less to get the house you want
  • Make a debt repayment plan - Figure out what you owe and what the interest rate is for each debt. Consider paying down your highest interest debt first, then paying down the next highest in turn, until you have paid off your debts. Remember that you will need to maintain minimum payments on all your debts while focusing on eliminating higher interest debts. Here’s some great tips on how to repay credit card debt.
  • Improve your credit score - The higher your credit score, the more likely a creditor is to lend you money. Find out how to raise your score in The Score of a Lifetime.
    “My advice to homebuyers is to find a balance between managing credit responsibly and building good savings habits,” says Cindi Levine, Mobile Mortgage Manager for Coastal Community. “Both of these are important indicators of credit worthiness. And many people don’t realize how important payments on utilities and cell phone bills are. Remember they can adversely affect your credit score if you don’t pay on time.”