Back to Blog

CMHC Homeowner Policy Modifications

General Angela Calla 29 Apr

The following changes below break down to 3 things being clarified

1.       No cashback mortgages anymore

2.       Harmonized qualifying between lenders- less applicants will qualify for the variable rate mortgage, it remains a luxury.

3.       Letters of Employment will continue to always be required (no real news here)


Questions on the best mortgage for you? Contact The Angela Calla Mortgage Team to help you personally 604-802-3983 



April 27, 2015 

Subject: Homeowner Policy Modifications Relating to B-21 Guidelines 

In line with the industry focus on risk management, the OSFI B-21 Guidelines, and responsible diligent lending practices, CMHC is implementing policy modifications for homeowner 1-4 unit properties and providing greater clarification on the requirements surrounding the verification of the borrower’s income and employment. 

§        CMHC is harmonizing its policies with respect to the qualifying interest rates used for low ratio and high ratio loans submitted for mortgage loan insurance. Whether the loan is high or low ratio, qualifying interest rate for all variable rate mortgages regardless of the term, and fixed rate mortgages with a term less than five years, will be the greater of the contractual mortgage interest rate or the five-year benchmark interest rate. For fixed rate mortgages, where the term is 5 years or more, the qualifying interest rate is the contract interest rate. 
§        In line with industry efforts to encourage borrowers to save for homeownership, lender cash backs will no longer be considered as an eligible non-traditional source of down payment to satisfy minimum equity requirements. 
§        To add clarity and ensure increased consistency in how its policy is interpreted and applied, CMHC is modifying its policy with respect to the verification of the borrower’s income and employment. The policy will now state that lenders must obtain third party verification of the underlying income for all borrowers including substantiation of employment status and income history. 

The effective date to comply with the modifications and clarification outlined above is June 30, 2015. CMHC recognizes that the policy change related to qualifying interest rates for transactional low ratio loans may generate system impacts for some Approved Lenders. For this reason, CMHC is allowing for flexibility in implementing this change. Approved Lenders are expected to implement the change as early as possible and no later than December 31, 2015

Attached you will find a document covering common operational questions and answers surrounding this announcement. 

Please feel free to contact me if you have any questions.