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Rising home prices erode affordability

OSFI & Reverse Mortgages

loan-to-value-CHIPThe new OSFI underwriting guidelines make reference to a 65% loan-to-value limit for reverse mortgages.

When that guideline came out, it got some people worried. The concern was: What happens if a reverse mortgage grows above 65% LTV after origination?

Fortunately, reverse mortgage borrowers will be unaffected.

Greg Bandler, HomEquity Bank’s Senior Vice President, Sales and Marketing, tells us:

In consultation with OSFI, we have been informed that given the unique features of reverse mortgages, OSFI has decided that it is most appropriate to apply the 65% LTV limit at time of origination.  Accordingly, our model at time of origination remains unaffected.  We will, of course, comply with all aspects of B-20.

CHIP-Reverse-MortgageSo it sounds like business as usual.

In practice, reverse mortgages are never issued with an LTV above 50% at origination. HomEquity adds that, “only a very nominal portion” ever approach 65% LTV during the life of the loan.


If you happen to be in the market for a reverse mortgage, here is a calculator where you can estimate the amount you’d qualify for.

Rob McLister, CMT