Self Employed Stated Income - CMHC will no longer be accepting stated income for those people who have been Self Employed longer than 3 years or are commissioned sales. We will now once again have to use your claimed, or taxable income to qualify you for a mortgage...They have also reduced the LTV from 95% to 90% for purchases on the stated product, and from 90% to 85% for refinances on the stated product.
The Posted 5 Year rate Is The New Qualifying Rate! Effective April 19, all high-ratio insured mortgages that have a variable rate or a fixed term under five years will be qualified using the greater of:..
The posted qualifying rate will be published by the Bank of Canada each Monday at approximately 12:01am Eastern Time. Here’s the link: Posted Mortgage Rate (Look for series V121764.)
Currently lenders use qualifying rates that range from discounted 3-year fixed rates (like 3.29% today) to posted 5-year fixed rates (5.39% today).
Going forward, mortgages with terms of five years or more will use the contract interest rate. This is key because it suggests lenders will still be able to qualify insured 5-year fixed borrowers using heavily discounted contract rates (e.g., 3.75% instead of 5.39%, as of today).
CAAMP estimates that 30% of home buyers currently choose a 1- to 4-year term. With this new qualifying rate, some of those people will be forced into a 5-year term (and a very small number will no longer qualify at all).
For mortgages with multiple terms (e.g., hybrid mortgages), each term will be qualified using the applicable criteria above.
With 27 years of direct mortgage lending experience, first with a major bank, then a local credit union and now as a Mortgage Broker, I have arranged mortgages on almost every type of property imaginable....even a 50+ ft fishing trawler!!