The Macchiusi Sales Team, Weiss Realty Ltd Brokerage (2021)
Effective October 17, 2016 home buyers that require mortgage insurance (purchasing with a down payment of 20% or less) will now have to pass a ‘stress test’ to qualify for a mortgage at the Bank of Canada 5-year benchmark rate instead of the current lender’s rate. This difference in the qualifying interest rate from the actual rate, about 2%, will reduce the amount a person may qualify for a mortgage by up to 20%.
Before this change, a family with $100,000 annual income could qualify for a mortgage around $580,000 and now may only qualify for a mortgage of around $490,000 since their mortgage eligibility is based on the 32% gross income to housing costs rule.
Here is a breakdown of how the new rules would affect a monthly payment on a home valued at $700,000.
The Macchiusi Sales Team - Weiss Realty Ltd. Real Estate Brokerage (2021)