…and you thought December was traditionally the month we celebrate with food, frolic and frothy frappuccinos. Well, not this year!
This year, on December 31, CMHC will tighten our belts for us by minimizing loopholes, clarifying and implementing the new guidelines, introduced earlier this year, for calculating debt ratios and confirming income documents.
“Under current practice, CMHC stipulates standard formulas for calculation of debt service ratios but has not been specific as to how each key input is to be treated,” says CMHC spokesman Charles Sauriol.
Specifically, the new standards clarify the treatment of key inputs included in the calculation of debt service ratios and minimum documentation requirements for all CMHC-insured homeowner loans, including:
Income: Variable Income, Self-employed Income, Rental Income, Guarantor Income
Debt: Unsecured Lines of Credit and Credit Cards, Secured Lines of Credit, Heating Costs
The clarifications are in line with the current practices of lenders overall and therefore are not expected to affect consumers. But people looking for mortgage financing may find these guidelines more intimidating than ever on the journey to home ownership. What can you do? Work with an Accredited Mortgage Professional and Broker like Tracy Irwin to help you navigate uncharted waters with mortgage solutions that open doors.
Read more about the Calculation of Debt Service Ratios: Treatment of Key Inputs here:
