Guidelines tightened for self-employed borrowers
CMHC is tightening the criteria needed for self-employed borrowers to get mortgage insurance, changes that will come into effect on April 9, according to Canadian Mortgage Trends.
Borrowers who apply under CMHC's self-employed stated income product will need a 10 per cent down payment instead of the five per cent down payment now required. These borrowers will also only be able to refinance up to 85 per cent loan to value instead of 90 per cent.
Debbie Thomas, partner and broker of record at The Mortgage Group, recently told CMP she has noticed a trend of insurance guidelines tightening for self-employed borrowers, who often write off a large portion of their income for tax purposes.
"The whole issue of reasonability has now been forced back and self-employed deals that used to be approved are not even close to being approved today," said Thomas. "It hasn't been an announcement or anything that has come out from the lenders or insurers, but it's something we've definitely noticed."