CMHC is slowly exiting the insurance market…



CMHC is slowly exiting the insurance market… with Canadian mortgage rates remaining at all-time lows and no visible slow down for the real estate market, CMHC is reducing its risk exposure to the mortgage market.

CMHC announced on Friday that it will be eliminating 2 of it’s programs for insured mortgages:

  • The self-employed “Stated Income” (where income cannot be verified via Notices of Assessment for the last 2 years), and
  • Second Home Mortgage (Properties that are not primary residence and are not used as a rental, ie. Vacation Home)

The new changes go into effect on May 29th, any applications submitted after this date will no longer be reviewed under those 2 programs.
So what options are still available for self-employed individuals who cannot provide proof of income?

  • Major lenders that use the other 2 insurers, Genworth and Canada Guaranty, assuming they will keep their programs open.
  • Self-Ensured Lenders
  • Private Lenders that can finance up to 85% LTV (15% down-payment)

Lastly, any individual who purchased a primary residence and was insured via CMHC will not be able to co-sign, or obtain another mortgage under CMHC. Exceptions being rental properties and bulk insured mortgages (mortgages with more than 20% down).

According to CMHC these 2 programs only account for 3% of its unit volume, but this appears to be first of many changes to come as CMHC is looking to reduce government involvement in the mortgage market and at the same time continue “slow down” the Canadian real estate market.

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