Effective July 1, 2020, it will be more difficult to buy a home in Canada if you’re a first-time buyer.


Canada Mortgage and Housing (CMHC) is tightening lending standards:

  • maximum gross debt service (GDS) ratio drops to 35 from 39;
  • maximum total debt service (TDS) ratio drops to 42 from 44;
  • minimum credit score rises from to 680 from 600; and   
  • non-traditional sources of down payment that increase indebtedness are no longer treated as equity for insurance purposes.

CMHC changed its underwriting policies because “COVID-19 has exposed long-standing vulnerabilities in our financial markets, and we must act now to protect the economic futures of Canadians,” said Evan Siddall, CMHC’s President and CEO. 

The Canadian Real Estate Association (CREA) believes these changes will make housing less affordable for first-time buyers who may be sidelined, trying to save a larger downpayment. 

How will this affect first-time buyers?

Income required rises between $15,000 to $30,000, depending on the home price and loan amount, as a result of lowering the GDS ratio to 35 from 39.
Monthly payments for Gross Debt Service
Notes: Price, May 2020, REBGV. P&I based on 90% loan, 25-year amortization, Bank of Canada 4.94% 5-year posted mortgage rate by chartered banks. Taxes include PTT and property. Condo fee at 50% of actual. Heat and condo fee estimated.
  Benchmark price  Principal and interest  Taxes  Heat and condo fee  Total monthly payment
Detached 1,456.700 7,721 2,868 200 10,790
Attached 792,700 4,197 1,485 300 5,982
Apartment 686,500 3,633 1,264 400 5,297
Comparison of gross annual income under GDS ratio change
Note: Based on monthly payment calculations in GDS table.
  Former GDS ratio
Gross annual income New GDS ratio Gross annual income Income difference
Detached 39 262,414 35 292,404 29,990
Attached 39 148.535 35 165,511 16,975
Apartment 39 132,906 35 148,096 15,189
Gross Debt Service ratio

Principal + interest + taxes + heat / gross annual income.

Total Debt Service ratio

Principal + interest + taxes + heat + other debt obligations / gross annual income. 

CREA has and will continue to advocate on behalf of home buyers, property owners and communities to promote policies supporting a vibrant and sustainable housing sector.

More information from CMHC.