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Our Response to CMHC Mortgage Underwriting Criteria Update

by Mortgage Professionals Canada | Jul 05, 2021
Effective July 5, 2021, CMHC is returning to its pre-July 2020 underwriting practices for homeowner mortgage loan insurance.


MPC welcomes today’s Canada Mortgage and Housing Corporation (CMHC) announcement of an important change to its mortgage underwriting criteria, a change which can help aspiring first-time homebuyers across Canada.

From CMHC: 

“Effective July 5, 2021, we are returning to our pre-July 2020 underwriting practices for homeowner mortgage loan insurance, specifically:

• CMHC will consider a Gross Debt Service (GDS) ratio up to 39% and Total Debt Service (TDS) ratio up to 44% for borrowers who have a strong history of managing their payment obligations.

• At least one borrower (or guarantor) must have a credit score that is greater than or equal to 600 at the time of the request for insurance.

• As always, CMHC will consider the overall strength of the mortgage loan insurance application, including alternative methods of establishing creditworthiness for borrowers without a credit history.

CMHC explains, “Last year, in response to the economic uncertainty driven by the COVID-19 pandemic, CMHC unilaterally implemented temporary changes to its underwriting practices for mortgage loan insurance.  We felt these changes would protect homebuyers, reduce government and taxpayer risk and support the stability of housing markets while curtailing excessive demand and unsustainable price growth.”

Further, CMHC states that it made today’s decision “because our July 2020 underwriting changes were not as effective as we had anticipated and we incurred the cost of a decline in our market share.  A healthy market share is an important consideration as it helps us fulfill the financial stability aspect of our mandate.”

MPC is encouraged to see new leadership at CMHC – an absolutely vital component of a healthy housing market in Canada – acknowledge notable issues arising from the amendments made in July 2020, the darkest days of COVID. Returning to pre-July 2020 underwriting practices will improve the competitive position of CMHC, conditions for first time home buyers, and is another sign of an improving Canadian economy. 

CMHC’s transparency through today’s announcement is refreshing, and welcome. We look forward to assisting CEO Romy Bowers, Minister Ahmed Hussen and their respective teams as Canada continues its recovery.

You can find the original CMHC release here.

Mortgage Professionals Canada | Canada Mortgage and Housing Corporation