CMHC Mortgage Rules 2022

This Page's Content Was Last Updated: June 24, 2022
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What You Should Know

  • To qualify for a CMHC-insured mortgage, your credit score must be at least 600
  • The maximum allowed GDS ratio is 39%, and the maximum allowed TDS ratio is 44%
  • You can't get CMHC mortgage insurance for homes that cost more than $1 million
  • You can't have an amortization period that is longer than 25 years
  • CMHC insurance is required if you make a down payment of less than 20%. The minimum down payment is 5% for homes under $500,000
  • If the purchase price is $500,000 or more (but less than $1 million), the minimum down payment is 5% of the first $500,000 and 10% of the remaining amount

The Canada Mortgage and Housing Corporation (CMHC) has rules for mortgages that they insure, as the risks of insured mortgages are transferred from mortgage lenders to the CMHC.

If you make a mortgage down payment that is less than 20%, you will need to get CMHC insurance, unless you choose to go with a private mortgage lender or an alternative private mortgage insurer. To limit their risk, the CMHC changed the rules and minimum requirements to get an insured high-ratio mortgage.

For more information on OSFI rule changes and the June 2021 stress test changes, visit our mortgage stress test guide.

CMHC New Rules 2020 and 2021

The CMHC introduced new underwriting policy changes that went into effect on July 1, 2020 to help manage risk by making it harder for homebuyers to qualify for a CMHC-insured mortgage. The CMHC predicted that these new CMHC mortgage rules will reduce eligibility by 30%. These new CMHC rules were reversed on July 5, 2021.

July 2021 CMHC Rule Changes

On July 5, 2021, the CMHC relaxed their underwriting guidelines to match with Canada's two private mortgage insurers. These changes:

  • Reduced the minimum credit score requirement from 680 to 600
  • Increased the maximum allowed debt service ratios from 35% GDS to 39% GDS, and 42% TDS to 44% TDS
  • The CMHC continues to not allow borrowed minimum down payments

Current CMHC Rules

Minimum Credit Score

At least one borrower will need to have a minimum credit score of 600. Previously, the minimum credit score was 680.

Sources of Down Payment

You can no longer borrow money for your down payment, which means that your down payment can only come from your own money or from a non-repayable gift.

Before July 1, 2020, non-traditional down payment sources, such as personal loans, were allowed for mortgages with a down payment of 5% to 10%, provided that the borrower had a minimum credit score of 650.

Debt Service Ratios

Your debt service ratio (GDS and TDS) is a measure that is used to see if you can afford your debt payments and housing costs. The maximum GDS and TDS ratios allowed are being reduced, which means that the maximum mortgage that you will be able to qualify for will be smaller.

  • Gross Debt Service ratio (GDS) is being increased from 35% to 39%. GDS is your housing costs compared to your income.
  • Total Debt Service ratio (TDS) is being increased from 42% to 44%. TDS is your housing costs and other debt payments compared to your income.

What is GDS and TDS?

These are ratios to measure your affordability for a potential mortgage, based on your current existing obligations and income. For example, let's say that your gross monthly income is $8,000. You're looking to buy a $500,000 pre-construction condo in Toronto that will require a monthly mortgage payment of $2,000. You will also need to pay property tax of $250 per month, heating will be $100 per month, and condo fees are $500 per month.

These costs all make up the gross debt service ratio (GDS). In this case, the GDS will be:

($2,000 + $250 + $100 + $500) / $8,000

= $2,850 / $8,000

= 35.6%

The GDS is 35.6%. This is under the CMHC’s GDS limit of 39%, which means that this borrower will pass this CMHC rule. However, the borrower will also need to pass the CMHC’s TDS limit. For example, this borrower might be making $750 per month in car loan payments based on a certain car loan interest rate.

The TDS ratio will be:

($2,850 + $750) / $8,000

= $3,600 / $8,000

= 45%

How will these CMHC rule changes affect me?

These new CMHC rules will mean that more homebuyers will be able to qualify for CMHC mortgage insurance, and that they may qualify for a larger mortgage amount.

For example, let’s say that your annual gross income is $100,000, and you currently have no housing costs, property taxes, or other costs. With the previous GDS ratio of 35%, you will be able to qualify for a mortgage with a monthly mortgage payment of up to $2,917 per month.

With the increased GDS ratio at 39%, you can get a mortgage with a monthly mortgage payment of up to $3,250. This means that the maximum amount that you can borrow will be larger.

Assuming a mortgage amortization of 25 years and a mortgage rate of 3%, a monthly mortgage payment of $2,917 will be made on a mortgage of $616,000. In comparison, a monthly payment of $3,250 will be made on a mortgage of $687,000. The mortgage amount that you qualify for has been increased by $71,000 due to the CMHC mortgage rule reversal for someone with an annual gross income of $100,000.

Why did the CMHC reverse their rule changes in 2021?

Canada's two major private mortgage insurers, Canada Guaranty and Sagen (Genworth), did not follow the CMHC in changing their underwriting policy in 2020. These private mortgage default insurers have kept their GDS ratio at 39% and TDS ratio at 44% throughout 2020 and 2021.

CMHC vs. Sagen

CMHCSagen
2020202120202021
Minimum Credit Score680600600600
Max GDS Ratio35%39%39%39%
Max TDS Ratio42%44%44%44%

Most mortgage lenders will allow you to get mortgage insurance from Canada Guaranty or Sagen instead of CMHC insurance, which means that while CMHC insurance is the most well-known type of mortgage default insurance, it is not always the most common in Canada.

The CMHC's mandate as a Crown corporation is to make housing affordable and accessible in Canada. By introducing stricter mortgage insurance rules, the CMHC limited the number of Canadians that could get an insured mortgage, and drove some off to private mortgage insurers.

For example, DUCA credit union offers insured mortgages in Ontario by CMHC, Sagen (Genworth) and Canada Guaranty. According to DUCA’s 2020 Annual Report, of DUCA's $1.07 billion of insured mortgages in 2020, 32.3% were insured by CMHC, while 67.7% were insured by Sagen (Genworth) and Canada Guaranty.

CMHC’s Share of Insured Mortgages For DUCA Credit Union

Mortgage Insurer% of Insured Mortgages (2020)
CMHC32.3%
Sagen (Genworth) and Canada Guaranty67.7%

Loosening their insurance requirements by lowering the minimum credit score and increasing maximum allowed debt service ratios makes CMHC-insured mortgages more accessible to Canadians who need the most support in getting a mortgage.

Previous CMHC Rule Changes in 2020

Between July 1, 2020 and July 5, 2021, the CMHC had stricter insurance rules. Those stricter rules have now been relaxed. These rules included:

  • A minimum credit score of 680
  • A maximum Gross Debt Service ratio (GDS) of 35%
  • A maximum Total Debt Service ratio (TDS) of 42%

CMHC Insurance Rules

There are a few basic requirements for CMHC-insured mortgages. These requirements haven’t changed in 2021.

  • Location: The property must be located in Canada
  • Price: The maximum purchase price or property value is $1,000,000
  • Down Payment: The minimum down payment is 5%
  • Amortization Period: The maximum amortization is 25 years

These basic requirements are also followed by private insurers Canada Guaranty and Sagen (Genworth). For residential mortgages, you can only have one homeowner CMHC-insured mortgage at a time, which means that you cannot get a CMHC-insured mortgage for a second home.

For most homeowners, the minimum down payment required for properties with a purchase price or property value up to $1 million is 5% of the first $500,000 and 10% of the remaining amount. CMHC insurance is not available for residential homeowners if the purchase price or property value is over $1 million. For multi-unit properties that remains owner-occupied and has up to 2 units, then the same down payment requirements apply.

There are different down payment requirements for other multi-unit property types. If the owner will occupy a property with 3 or 4 units, then the minimum down payment is 10% of the entire value. Small rental loans, where the owner will not be occupying an unit in a property with 2 to 4 units, requires a minimum down payment of 20%. In the case of small rental loans, you will be able to use up to 50% of your rental income when calculating your debt service ratios when determining CMHC insurance eligibility.

CMHC does offer a different mortgage loan insurance for multi-unit properties with more than 5 units. With CMHC’s new multi-unit insurance (MLI) Select, you may be eligible for a down payment of as low as 5% and amortization of up to 50 years for properties with more than 5 units that meet certain criteria.

Sagen (Genworth) and CMHC both only allow traditional sources for your down payment, such as your savings or a gift from a relative. Canada Guaranty allows down payments to be borrowed, such as from a loan, for certain mortgage insurance products.

The maximum amortization for all insured residential mortgages in Canada is 25 years. This change was made by the OSFI in 2012. Before 2012, the maximum amortization was 30 years for insured mortgages. This was reduced from 35 years in 2011 and 40 years in 2008.

CMHC MLI Select

CMHC MLI Select is CMHC’s new mortgage loan insurance product for multi-unit properties with a point scoring system. Introduced in March 2022, the MLI Select is for multi-unit residential properties that have more than 5 rental units, or a minimum of 50 units or beds for retirement homes.

This new product gives borrowers the ability to receive incentives on their mortgage loan insurance in exchange for meeting certain criteria. This might be a commitment to make units affordable, energy efficient, and/or accessible. Borrowers will receive points for meeting criteria. There are point thresholds for incentives, which can range from a higher maximum loan-to-value (LTV) ratio to a longer maximum amortization period.

Affordability

The first set of criteria that a borrower can choose to commit towards has to do with affordability for renters. Borrowers will need to commit that at least a certain percentage of units will be at rent levels below 30% of the median renter income in the area for at least 10 years. The more units committed, the more points the borrower will receive. Borrowers can get an additional 30 points if they commit to at least 20 years.

The median renter income is the median household income for the area based on the Canadian Income Survey and Survey of Labour and Income Dynamics. For example, the median renter income for the Toronto CMA is $53,900. This means that the rent level would need to be less than $16,170 per year, or $1,347.59 per month, for at least 10% of units in a new construction in order to be awarded 50 points.

Affordability: Rent Levels Below 30% Of the Median Renter Income

Points AwardedNew ConstructionExisting Properties
50 PointsAt least 10% of unitsAt least 40% of units
70 PointsAt least 15% of unitsAt least 60% of units
100 PointsAt least 25% of unitsAt least 80% of units

Energy Efficiency

The second set of criteria is energy efficiency. Energy efficiency is based on how the property is either better than the National Energy Code of Canada for Buildings (NECB) or the National Building Code of Canada (NBC) for new construction, or how it has improved over current levels for existing properties.

Energy Efficiency: Performance of the Property

Points AwardedNew ConstructionExisting Properties
30 PointsAt least 20% better than NECB/NBCAt least 15% less than current levels
50 PointsAt least 25% better than NECB/NBCAt least 25% less than current levels
100 PointsAt least 40% better than NECB/NBCAt least 40% less than current levels

Affordability

Accessibility has two levels. The first level awards 20 points, and requires either a minimum of 15% of units to be accessible, at least 15% of units to be universal design, or for the property to receive Rick Hansen Foundation Accessibility Certification.

The second level gives 30 points, if either all units are universal design, all units are accessible, the building receives Rick Hansen Foundation Accessibility Certification "Gold", or at least 15% of units are accessible and at least 85% of units are universal design.

MLI Select Benefits

Based on the point-scoring system, you may be eligible to receive certain benefits. In addition, all MLI replacement reserve requirements are discretionary. New construction has waived rental achievement holdbacks for all point thresholds. Having at least 100 points also gives limited recourse, rather than full recourse.

MLI Select Benefits

Points RequiredNew Construction
Maximum LTVMaximum Amortization
50 Points95%40 years
70 Points95%45 years
100 Points95%50 years
Points RequiredExisting Properties
Maximum LTVMaximum Amortization
50 Points85%40 years
70 Points95%45 years
100 Points95%50 years
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