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What the New Mortgage Rules Mean for Homebuyers

The Office of the Superintendent of Financial Institutions (OSFI) introduced new rules on mortgage lending to take effect January of 2018.

OSFI is setting a new minimum qualifying rate, or “stress test,” for mortgages with down payments 20% or greater.

Without getting too technical what this means is that purchasers will lose about 20% of their purchasing ability.

So, if you are currently able to qualify for house worth $559,000  in January you will only be able to afford a home for about $447,200

This new “stress test” tests your ability to afford a mortgage payment that is either 4.99% or 2% over the best rate you can find, whichever is more.

Some of the lenders are working on ways to make it easier for purchasers to qualify after January 1st 2018 by doing things like extending the amortization (The length of time it takes to fully pay your mortgage off) from 25 years to 30 years and higher, or they may relax the qualifying ratios.

The only way to avoid this latest change is to make your buying decision before January 2018.