CMHC Self-Employed Policy Changes

CMHC Self-Employed Policy Changes

Mortgage loan insurance applications submitted to CMHC on or after April 9th, 2010 will include different criteria for self-employed borrowers without traditional third-party validation of income.

CMHC is reducing the maximum LTV for the Self-Employed Product Without Third-Party Validation of Income as follows:
For purchase and portability transactions, the maximum LTV is being reduced from 95% to 90%
For refinances, the maximum LTV is being reduced from 90% to 85%
The CMHC Self-Employed Product Without Traditional Third-Party Validation of Income is intended for self-employed borrowers who have difficulty providing documentation for their current income level. Typically, these are borrowers who recently became self-employed.

Accordingly, self-employed borrowers who have been self-employed in the same business for more than three years will not be eligible under this product. CMHC continues to require that the borrower have a minimum of two years of experience in the same field. This can include time spent working as a non-self-employed worker in the same field.

As CMHC has found that commissioned income can be relatively easily substantiated, borrowers who earn income through commission will no longer be eligible for the CMHC Self-Employed Product Without Traditional Third-Party Validation of Income.