Credit Score Requirements on Mortgages Tighten

Posted by Alan Zunec on Tuesday, December 6th, 2011 at 11:52am.

Another sign that the mortgage market is tightening is an upping of the credit scores required to get a loan. Reports just released by the CMHC notes that a credit score is being considered much more carefully than before. This will most likely not affect seasoned investors that are already in the game, but rather the newcomers just testing the pond waters.

In 2010, the average credit score for borrowers with a CMHC insured mortgage was 731. In the first three quarters of 2011, that number went to 735, which is the highest jump since back in 2007. True, it is a modest increase, but it does have some brokers who have new investor clients worrying whether they can actually approve a mortgage.

What it amounts to is that the recommendations made by CMHC are being followed much more closely. Guidelines require that a homebuyer have a credit score over 600 to be approved on a loan that is worth 80 percent of the value of the property. The score requirements go up with a 90 percent value loan, and down to 580 for a loan that is between 60 and 80 percent of a home’s value.

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