As of May 30, 2014, Canada Mortgage and Housing Corporation (CMHC) is discontinuing mortgage loan insurance for buyers of second homes and making it harder for self-employed home buyers to qualify for mortgage loan insurance.
In Canada, home buyers with less than a 20 per cent down payment are required to buy mortgage insurance. The largest provider of mortgage insurance in Canada is the CMHC.
Second home buyers: this program offered mortgage loan insurance to second home buyers with less than a 20 per cent down payment. The program ends May 30 and could affect parents helping children buy their first home.
Self-employed buyers: this program previously allowed self-employed buyers to prove their income without traditional third-party validation. Starting June 1, 2014, the program will require self-employed buyers to prove their income with copies of their Canada Revenue Agency Notice of Assessment, audited financial statements, or unaudited financial statements prepared by an independent third party, for the previous two year period.
Both programs available until May 30
Regardless of the closing date of the home purchase, both programs are available for new mortgage loan insurance applications received by CMHC on or before May 30, 2014.
CMHC is reviewing its mortgage loan insurance business and making changes to reduce taxpayers’ exposure to risk.
Private insurers such as Genworth will still offer mortgage insurance to buyers of second homes and to self-employed borrowers unable to provide traditional sources of income validation.