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A “big six” bank announces a new program to help Canadians with their home financing needs

It is about time for some good news to be shared regarding the housing market and the mortgage industry. Luckily, one bank has stepped in to help make that happen. The bank has launched a new program that aims to help Canadians with financing a home. Great, right? I sure think so. 

Let’s look at some of the highlights the program has to offer.

  • The new program will expand to help Canadians and permanent residents who have returned to Canada within the past five years

This is excellent news for those who have been living abroad and recently returned to Canada. 

  • The new policy will now help support refinances and transfer ins.

This means buyers will be able to finance second homes and rental properties that the owner does not live in. 

  • The policy will allow buyers to apply with up to 80% Total Debt Serviceability (TDS).

This means that buyers can put down less upfront and still own a home. Under this program, buyers will not need to meet a requirement of 44% TDS until the following year. This is great news for self-employed people and business owners who intend to scale their income over the next 2 years.

  • The new policy is adapted for non-traditional earners and self-employed people looking for a mortgage.

This is great news for anyone who is not a traditional earner, has self-employed income, or is in a complex income situation. The new program aims to help these types of buyers procure a mortgage. 

  • The new policy allows for gifted funds. 

Funds to help with the down payment on a home can be gifted by an immediate family member. This makes qualifying for a mortgage all the easier, as some lenders might not allow for financial gifts to be used as a down payment on a mortgage. 

How can buyers benefit from the new mortgage program?

The new program makes getting accepted for a mortgage easier for those in complex income situations. Citizens and permanent residents who have been living abroad and recently returned home to Canada, those who are not traditionally employed or self-employed, and those with non-traditional sources of income can more easily qualify for a mortgage under the new program. Expanding the program to meet these groups of people’s needs is good news for the housing market.

What else should I know about the new mortgage program?

There are a few things potential buyers should take not of if considering taking advantage of the new program that one of the “big six” banks is offering. 

  • First, you should be aware that potential customers will need to be employed in Canada full-time for at least 3 months. 
  • Only the base income will be accepted as income for buyers with self-employed or fluctuating income. 
  • Customers financing non-owner-occupied rental properties will need to meet basic income requirements as well as have an additional $500,000 in liquid assets in Canada. 
  • Applications with over 80% TDS will still be considered if an application is strong enough and the buyer has over $500,000 in liquid assets that are not gifted. 

What this means for the real estate market

Call me an optimist, but I think this is a huge step forward for the real estate market. The housing market has already been booming over the past year, and many like me are wary of the fact that what comes up must go down. The new program allows for more buyers that have the financial assets to cover a mortgage enter or continue in the real estate market. This can be one way to keep the market inflated and avoid a crash. 

High-income and high-net-worth buyers could help the property market stay on its feet and continue to boom. The new program may not only benefit prospective buyers but may help the rental market in Canada see lower rents as a factor of supply and demand. If there are more properties available for rent, the hope is that rents will see a slight decrease, helping those who need to rent now but are saving up for a mortgage put away more money for a down payment. 

The bottom line

The new program announced this week will not only help higher income and higher net worth buyers access mortgages. It will also help those with gifted down payments, those who are self-employed, and those with complex income situations find mortgages that suit their needs. Hopefully, more banks will follow in these footsteps, and we will see the current boom in the housing market carry on for quite some time. 

Your best interest is my only interest.   I reply to all questions and I welcome your comments.  Like this article?  Share with a friend.

Steve Garganis 416 224 0114

Steve Garganis View All

As an industry insider, Steve will share info that the BANKS don't want you to know. Steve has appeared on TV's Global Morning News, CBC's "Our Toronto" and The Real Life TV show. He's also been quoted in several newspapers such as the Globe and Mail, The Toronto Star, The Vancouver Sun, The Star Phoenix, etc.

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