Friday, June 22, 2012

New Mortgage Guidelines in Canada as per Finance Minister Jim Flaherty June 21 2012

Hello, This is a Summary of changes to mortgage guidelines as per Finance
Minister Jim Flaherty...(effective July 9th, 2012)

1) The maximum amortization period for purchases with less than a 20% down
payment will be 25 years (down from 30 years)

2) Home owners will only be able to refinance their homes up to 80% of the
home's value (down from 85%)

3) The government is also resetting the maximum Gross Debt Servicing ratio
(GDS) to 39% and the Total Debt Servicing ratio (TDS) to 44% (Currently, GDS
does not apply to qualified borrowers with credit scores of 680+) ***see
below for info GDS and TDS

4) Mortgage Insurance will no longer be available of homes over $1 million
(you will need to have at least 20% down payment)

OSFI (The Office of the Superintendent of Financial Institutions Canada is
the primary regulator and supervisor of federally regulated deposit-taking

Also announced the following changes...

1) The maximum loan to value on home equity lines of credit (HELOCs) is
cut to 65% from 80%

2) The loan to value will be re-calculated upon any refinancing and
whenever the lender deems prudent

3) HELOCs will continue to serve as revolving lines of credit with no
specific amortization period. However, OSFI says lenders must now expect
borrowers to have the ability to fully repay HELOCs over time.

Debt Ratios (GDS / TDS Ratios)

Lenders have long relied on two standard measures of one's "ability to pay"
their mortgage:

Gross Debt Service (GDS): The percentage of the borrower's income that is
needed to pay all required monthly housing costs (mortgage payments,
property taxes, heat and 50% of condo fees).

Total Debt Service (TDS): The percentage of the borrower's income that is
needed to cover housing costs (GDS) plus any other monthly obligations that
an individual has, such as credit card payments and car payments.

The acceptable ratios for both have generally been 32% and 40% respectively.

For people with very high credit scores, GDS requirements are often waived
and the TDS maximum is slightly higher (44% as of January 2011).

I hope this finds you Happy and Healthy!

All the Best!


A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc.
Providing Full-Time Professional Real Estate Services since 1987
BUS 905-828-3434
FAX 905-828-2829 CELL 416-520-1577

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  1. Thanks a lot for sharing these information. I've always been on the lookout for the status and laws of housing in Canada since i'm planning to invest there in the future.

    barry trujillo
    Epic Pro Academy

  2. To tell you the truth, an individual Canadian is now richer in terms of monetary value compared to Americans. Canada's economy is on the rise while ours is partially? sinking. Eitherway, real estate is a great investment wherever you are. Just remember to spread our your property so in case another economic meltdown or housing bubble burst happens, you won't lose all of your investment. Just my two cents.

    More information on real estate and investing at

  3. The new rules involve two significant changes: reducing down the highest possible home loan amount period from 30 to 25 years, and placing a cap of 80 % on the amount that property owners can lend on their current home, which was 85 % before modify. It is worth noting that these changes only implement to government-insured loans.