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Qualifying Criteria For Investors

Author: Keith Uthe Demystifying Mortgages | | Categories: Certified Real Estate Investment Adviser , Home Mortgage , mortgage prequalifying

You may have heard that the Government is proposing new tougher qualifying criteria for investors. Below is an article that goes into details.

The Ministry of Housing and Diversity and Inclusion, in partnership with the Canada Mortgage and Housing Corporation (CMHC), is concerned with the amount of speculation (investing in rental properties) which they believe has led to Canadians overbidding on homes and borrowing more than they can afford (which is rather counter-intuitive as borrowers still have to meet the governments qualifying criteria to get a mortgage).

“That’s why our government is looking at every tool at our disposal to tackle these challenges head-on. That includes the Fairness in Real Estate Action Plan,” the statement read. “By developing policies to curb excessive profits in investment properties, protecting small independent landlords and Canadian families, and reviewing the down payment requirements for investment properties, we are targeting the issues the market is facing from multiple angles.”

Some of the proposals are:

  • Increasing the down payment on investment properties anywhere from 25% to 35% down.
  • Elimination of using borrowed funds for the down payment to purchase a rental property

As of now, we do not know when these rules will be imposed or the exact structure.

Please review this article before the rules change.

Now, this may make investors unhappy but the government is trying to level the playing field for residential buyers. This will make it easier for residential buyers to purchase a home. Now they need to do something specifically for first-time buyers. Let’s hope that will come soon.