The CMHC Simplified Program has been tightened up and modified.
A brief background…
This program was introduced just a few short years ago to assist self-employed individuals in the purchase of a home. Many clients in this category have a difficult time in easily providing proof of their income depending on how their company is structured, tax deductible items, etc. The CMHC Simplified program allows individuals who are self-employed for more than two years to basically state what their income is to qualify. Of course a “reasonability test” for the industry on what is stated is done. Documentation required is only confirmation via 3rd party sources to confirm a minimum of 2 years self-employment (business licenses, incorporation documents, etc.). No Notice of Assessment is required but the person must state they do not owe any income taxes. Financing could be obtained up to 95 LTV.
- CMHC will no longer be accepting stated income for those who have been BFS longer than 3 years or are commissioned sales. They have also reduced the LTV from 95% to 90% on the stated product.
With these changes the program is so narrowly focused that it will fit very few applicants. Along with the other recently announced changes, this will further tighten credit in the market.