Changes to Canadian Mortgages

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Some big news was released in the world of Canadian finance -

CMHC (Canada Mortgage and Housing Corp), which is a mortgage insurer backed by the federal government, is tightening up their requirements to qualify.

Side note - Other insurers such as Genworth have not followed suit with these rule changes

For an individual to be approved for an insured mortgage with CMHC (putting less than 20% down) they now require -

  • Credit score over 680 for at least one purchaser (old rules were 600)

  • Gross debt servicing ratio (GDS) has been limited to 35% (as opposed to 39%)

    • This is a percentage of your monthly household income that covers your housing costs.

  • Total debt service (TDS) has been limited to 42% (as opposed to 44%)

    • This is a percentage of your monthly household income that covers your GDS plus any other debts (car payments, student loans, etc.)

  • Down payments can no longer be from borrowed funds

What does this mean for housing prices in Ottawa?


This is a nation-wide directive that was set into motion because a big drop in home prices was predicted. So far in 2020 our housing prices in Ottawa have weathered the decline of the stock market, and a global pandemic. I have not seen a drop in pricing, maybe a few less offers presented in multiple offer situations. Ottawa’s housing market is so steady because we are a government town and we are becoming a popular city to invest in for out-of-towners. The average Ottawa home price in May 2020 was $548,140, making your down payment of 20% = $109,628. 20% or more down would mean you can avoid the new CMHC rules. This could be a huge challenge when looking at the larger Canadian real estate markets. Toronto for example, your average property is ~$900,000, 20% = $180,000.

Unfortunately in the short term, this will affect your average first-time homebuyer in Ottawa negatively. It won’t have as much of an affect for down-sizers or up-siders since they should have built up equity within their property. I hope in the long run that this directive can help buyers and housing prices in these unknown times.

If you are currently shopping around, contact your mortgage broker asap to assess whether this affects your purchase.


Don’t hesitate to reach out if you have any questions.

Steve Peippo