Guidelines tightened for self-employed borrowers

Guidelines tightened for self-employed borrowers

CMHC is tightening the criteria needed for self-employed borrowers to get mortgage insurance, changes that will come into effect on April 9, according to Canadian Mortgage Trends.
Borrowers who apply under CMHC's self-employed stated income product will need a 10 per cent down payment instead of the five per cent down payment now required. These borrowers will also only be able to refinance up to 85 per cent loan to value instead of 90 per cent.

Debbie Thomas, partner and broker of record at The Mortgage Group, recently told CMP she has noticed a trend of insurance guidelines tightening for self-employed borrowers, who often write off a large portion of their income for tax purposes.

"The whole issue of reasonability has now been forced back and self-employed deals that used to be approved are not even close to being approved today," said Thomas. "It hasn't been an announcement or anything that has come out from the lenders or insurers, but it's something we've definitely noticed."



  • Not large enough voice 2010-03-11 2:19:10 PM
    Don't you wonder what happened to common sense? Where did it happen that everyone is running with their tails between their legs trying to cover their over sized butts?
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  • Dave 2010-03-11 3:39:51 PM
    So you can hide from the taxman, have a great net worth, own lots of assets and not buy a house. People that have good accountants and financial planners get screwed. Tell me how does the doctor making 500,000 showing the govt that he makes 30,000 amass all his assets without being shrewd.
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  • Mukesh 2010-03-11 4:53:11 PM
    what's most confusing is that cmhc issued an "advice" to lenders that bfs clients who are self employed for more than 3 years cannot qualify under the bfs programs after April/2010.....only bfs clients in their 1st to 3rd years of running their business can qualify under their bfs program ??????

    Who came up with this one? And how does this make any sense at all.

    BFS clients who have been running their businesses for 3+ years sucessfully, which is no small feat, are now being penalized for being able to keep their businesses up and running.
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