Countdown To The New Rental Rules

3d House (XXL) In seven days the world of small-rental financing will change drastically.

As we wrote in February, the nation’s biggest mortgage default insurer (CMHC), is modifying its rental property qualification criteria.

The changes will affect anyone who needs a CMHC-insured mortgage to buy or refinance a 1-4 unit rental property.

More on:  The New Rental Rules

  1. A quick follow-up note…
    Some lenders are telling us that this Thursday (April 15, 2010) is the last day to submit under the old rental proeprty rules.
    It seems like CMHC is already underwriting under the new guidelines. So don’t expect any 95% LTV rental approvals if you need the 80% rental offset.
    Cheers,
    Rob

  2. Hi Adam,
    We haven’t heard all of AIG’s changes yet–except that they’ll be capping LTV at 80% on non-owner occupied rentals.
    Once we confirm we’ll post the info. In the meantime, if anyone else here has heard of anything please feel free to post as well…
    Cheers,
    Rob

  3. “It would also be nice if the government were a bit more transparent with the data it uses to alter the financial establishment and affect so many people.”
    Hi Rob,
    Fantastic post. I couldn’t agree more with this quote above. The Fin. Dept went over the edge on the rental rules. There will be a lot of clients who will now have no good options at renewal. I know there was a lot of public pressure and they had to do something, but I think the govt caved here.
    Dave

  4. The CMHC guidelines for using rental income from nonowner occupied properties are different.
    They’re the same as for nonsalaried income; that is, you just gross up a 2 year average of Line 150 and add 15%.
    This according to CMHC Advice for Approved Lenders # 145 and checked with CMHC’s 1 888 GO emilie telephone service 1 888 463 6454.

  5. Important note for your investor folks. If at all possible, use chartered banks for the first few properties, rather than other lenders who have to be insured on the back end when they bundle. It’ll potentially extend one’s abilities by a property or two.

  6. Well written piece, most of which I agree with. When there is a major change in the rules regarding mortgage insurance that don’t seem to be supported by ANY empiracle evidence of a need for those changes, I am inclined to believe that the changes serve a craven political purpose.
    It seems counterintuitive that the Conservative government would attact the people most likely to be generally supportive of conservative public policy, but that is precisely what they have done here. Revenue property investors tend to be highly conservative politically and not interested in rocking the boat.
    Harper has now shown that he is now abandoning his conservative constitutency in favour of enriching the banks. Strange policy. I wonder why he would do this?

  7. Hi Tom,
    Thanks for the note.
    CMHC’s “Advice 145” states that rent from subject properties (owner-occupied and non-owner occupied) will use the 50% add-back.
    It looks like non-owner occupied non-subject rental properties will get the non-salaried income treatment.
    “Advice 148” just came out with new intepretations so we’ll do a piece on this soon because it’s confusing to many.
    Cheers,
    Rob

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