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1 May

Here are the May 30 2014 changes to the CMHC guidelines. What does this mean? Traditional mortgage financing for self employed c

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Posted by: K.C. Scherpenberg

CMHC is Changing Its Mortgage Insurance Product Offerings Effective May 30, 2014

As part of the review of its mortgage loan insurance business, CMHC is discontinuing its Second Home and Self-Employed Without 3rd Party Income Validation mortgage insurance products effective May 30, 2014. Self-employed Canadians can still qualify for CMHC insured financing through CMHC homeowner products with a validation of their income using traditional methods.

CMHC Second Home and Self-Employed Without 3rd Party Income Validation will remain available for new mortgage loan insurance requests submitted to CMHC before May 30, 2014, regardless of the closing date of the home purchase. As is normal practice, complete borrower and property details must be submitted by a lender to CMHC when requesting mortgage loan insurance.

For the majority of self-employed borrowers, income validation is readily available. To validate their income, self-employed borrowers can provide copies of their Notice of Assessment, audited financial statements or unaudited financial statements prepared by an independent third party, for the previous two year period.

Going forward, CMHC will limit the availability of homeowner mortgage loan insurance to only one property (1 – 4 units) per borrower/co-borrower at any given time.

Frequently Asked Questions:

What is the cut-off for home purchases using CMHC’s Second Home and Self-Employed Without 3rd Party Income Validation products?

CMHC’s Second Home and Self-Employed Without 3rd Party Income Validation will remain available for new mortgage loan insurance requests submitted to CMHC before May 30, 2014, regardless of the closing date of the home purchase. As is normal practice, complete borrower and property details must be submitted by a lender to CMHC when requesting mortgage loan insurance.

I am planning to buy a home in the coming months and will require a CMHC-insured mortgage. If I do not know which property I will be purchasing before May 30, 2014, am I still able to purchase a home using CMHC’s Second Home or Self-Employed Without 3rd Party Income Validation products?

Your lender will need to submit a complete mortgage loan insurance application to CMHC prior to May 30, 2014. Once your lender has obtained the necessary borrower and property information from you, they will be able to proceed with a CMHC mortgage loan insurance request.

CMHC’s Second Home and Self-Employed Without 3rd Party Income Validation will remain available for new mortgage loan insurance requests submitted to CMHC before May 30, 2014.

I am purchasing a home that is being built and will require a CMHC-insured mortgage. I will require progress advance draws which will occur on or after May 30, 2014. Will CMHC’s Second Home and/or Self-Employed Without 3rd Party Income Validation remain available to me?

CMHC’s Second Home and Self-Employed Without 3rd Party Income Validation will remain available for new mortgage loan insurance requests submitted to CMHC before May 30, 2014 even if progress draws are requested on or after May 30, 2014.

Does this mean that a borrower will no longer be able to act as a co-borrower on another application?

CMHC will now limit the availability of homeowner mortgage loan insurance to only one property (1 – 4 units) per borrower/co-borrower at any given time.

Will CMHC accept financing overlap in situations where the closing date of the home being purchased is before the closing date of the home being sold?

Overlap of CMHC-insured financing (i.e. bridge financing) will be permitted when there is a firm purchase and sale agreement for the existing property. Other exceptions that may arise due to specific circumstances may be considered on an exception basis.