CMHC Home Buyers Guide

General Greg Weaver 23 Jul

Market Smarts: Home Buying Guide.

The Canada Mortgage and Housing Corporation (CMHC) is one of Canada’s three mortgage insurers. Beyond insuring mortgages, CMHC also offers consumer guidance in the form of a unique step-by-step guide for home buying Canada, which the organization has dubbed the “roadmap” to homeownership.

The 27-page guide, Homebuying Step By Step is available on CMHC’s website. This guide is a manual for homeownership, breaking down the phases potential buyers will need to consider when looking to get into the housing market.

what homebuyers should know

This guide focuses on preparation being the key to homeownership success and touches on many things for homeowners to keep in mind. A few good guidelines when considering purchasing a home, including debt management, necessary documents, pre-approval, and more!


According to the CMHC, a homebuyer’s monthly housing costs should never exceed 32 percent of their average gross monthly income. This includes monthly mortgage payments, property taxes, condo fees, and heating expenses. It is also recommended that a family’s debt load, such as car loans and credit card payments, should never exceed 40 percent of the average monthly income. While this recommendation may be somewhat conservative, remaining within these guidelines will ensure that you will be able to afford your debts, while maintaining future financial stability.


This guide also includes a segment regarding the documents a home buyer will need for a mortgage. When you meet with your lender or mortgage broker it is recommended that you have these documents handy, which include things like personal identification, proof of down payment, proof of income, proof of savings and investments, and details of current debt.


CMHC also recommends that people get pre-approved for a mortgage before they start looking for a home. Getting pre-approved can prevent future roadblocks when you find your dream home, and ensures that subject-to-financing clauses won’t be an issue. It also guarantees the rate for up to 120 days, so that you can access the best mortgage once you’ve found the right home.


This guide also discusses the various sources for mortgages, which include: banks, trust companies, credit unions, and pension funds. As always, it is recommended that you shop around before you make a decision. Hiring a mortgage broker is another great resource, as they are able to access rates for more than one lender. The guide advises asking real estate agents, friends, or family members for recommendations on a lender or broker.

Along with the above, this guide also details information about your credit score, mortgage loan insurance, home considerations, the mortgage process, and home management. There are also very detailed financial calculations, which factor in costs that many new homebuyers might not even think about, such as groceries, dining out, and hobbies. In addition, you will find information about:

  • Principles that help buyers determine how much they can safely afford to spend on housing.
  • A list of the upfront and ongoing costs of homeownership.
  • Information on how to prepare for a meeting with a lender or broker.
  • Definitions of key terms to know when buying a home.
  • Explanation of mortgage basics and tips for how to manage your mortgage.
  • Tips on how to maintain your home and protect your investment.

The underlying theme of the guide is to prevent Canadians from getting in over their heads in debt when buying a home. This guide also shows just how far mortgage brokers have come in Canada, with them mentioned alongside banks throughout.

If you are looking to purchase your first home, contact Greg Weaver today for expert advice! It is our job to help find the best mortgage product for YOU.


Article Published by DLC Marketing Team

Changes to the Stress Test and What You Need to Know

General Greg Weaver 6 Jul

As you may have heard, the Bank of Canada recently changed the stress test rules as of June 1, 2021. With these changes, now both insured and uninsured mortgage borrowers will be subject to a stricter stress test when qualifying for their mortgage.

The new qualifying rate on uninsured and insured mortgages is now the contracted rate plus two percentage points or 5.25%, whichever is higher.

Overall, the implementation of these tougher stress test rules will reduce buying power by roughly 4-5% for borrowers. To help illustrate  how this change affects you, consider the following scenario with $100,000 gross income:

The previous stress test at 4.79% would give this individual the ability to borrow $469,530 (based on a good credit score with max GDS/TDS qualifications at 39/44%). Now, with the current scenario of 5.25% stress test rate, they can now only borrow $448,880 (based on a good credit score with max GDS/TDS at 39/44%). This is a difference of $20,650 which reduces your home options.

To ensure you are searching in the right price range and budgeting accordingly, it is important to consider this stress test change. If you are looking to purchase your first home or move, please don’t hesitate to contact me today for a better understanding of the rules and what you qualify for.


Original article published by Dominion Lending Centres