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CMHC cutting back Insurance Coverage

April 28, 2014 | Posted by: Laking Financial

Effective May 30, CMHC said it will discontinue insuring second homes and will require self-employed Canadians to have third party income income validation.  

Now will you be able to buy a second home?  The simple answer is Yes but it may not be able to be insured meaning you may require a larger down payment.  There are Private mortgage insurers in Canada who have similar programs that may not cut their programs.  Time will tell after they have a chance to respond.

The second home product was introduced in 2005 and applied when purchasing an owner-occupied second home anywhere in Canada.

CMHC said it will limit the availability of homeowner mortgage loan insurance to only one property (one to four units) per borrower/co-borrower at any given time.

For self-employed borrowers this will make things more difficult to obtain mortgage financing.  Many self-employed borrowers often have many expenses to write off thus lowering their taxable income.  While this does help save on taxes, it has a negative impact on mortgage financing.   There is currently another self-employed program available with Genworth Financial (private mortgage insurer).  For those self-employed borrowers, lets hope they don't make any changes.

If you have any additional questions regarding these changes or any other financing questions you can email us at, call us at 506-474-1070 or visit our Facebook page


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