For Better or Worse: Mortgage Rules in the Past vs Present

Mortgage rules 2018

If you haven’t looked for a new home or thought about a refinance recently, you might not realize that we’ve had big changes in mortgage rules in Ontario.

The biggest change has been the introduction of the mortgage stress test, which can play a factor in whether or not you will qualify for a mortgage.

It can also affect how much you’ll need to put down when purchasing a new home or rental property.

Here’s a quick breakdown of some of the most important ways mortgages are different now than they have been in the past.

Down Payments and Rates

In the past, you could get away with having no down payment at all, and your rate would not be affected. However, you would have to pay a mortgage premium, which was tacked on to your monthly payment. This meant you would end up paying even more than the original price for the property.

Today, you must put down at least 5% up front. This money cannot be borrowed from other lenders. It must either come from your own resources or be gifted to you.

Be sure to download our Home Buying Guide. It is filled with information about what you need to do when buying a home.

Rentals and Down Payments

Previous rules allowed purchasers to obtain a loan for a rental property for no money down as well. You could also have loans on as many rentals as you wanted. This was an excellent opportunity for investors looking to build wealth in real estate.

With the new rules, however, you will need to put down at least 20-25% for a rental property. You will also find a cap of 4-8 rentals for most lenders. Investing in rental properties is still a viable option, but it will require more capital in the beginning.

Child Tax Credits

In the past, most lenders would consider the full amount of your child tax credits toward your income. This meant you could often qualify for a larger mortgage if you had little ones running around the home.

Most lenders today will not apply that credit as income when calculating your total income for the loan. For those that do, many do not apply the full 100% of the credit in the figures. That means your purchasing power is reduced, so you’ll need to look at less expensive homes or come up with a larger down payment.

Self-Employment and Down Payments

Over the years, it has become more difficult for the large numbers of self-employed Canadians to qualify for a mortgage. This was offset somewhat in the past by a program that had a minimum down payment of just 10%.

You should also be prepared to have a paper trail of at least two years showing that you have consistently been making your stated income.

Note that self-employment is probably broader than you think. Small business owners and contractors, as well as those working on commission, will need to show steady income over the years (at least 2 years).


While the new mortgage rules prevent purchasers from taking out risky mortgages, they can also complicate the buying process.

Our team knows the ins and outs of the new rules, and we can help you navigate the approval. Thank you for taking the time to read our blog. We are always available to chat about your particular situation and answer any questions that you may have.

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