No more 40-year $0 down mortgages

It was a great idea at the time.

But as of Oct. 15th, Canadians can't get government-backed morgages that are based on 40-year amortization and no money down.

The Finance Dept. stated on Sept.3rd that it won't guarantee 40-year mortgages anymore and will require a minimum 5% downpayment on the value of a home. That means a 35 year amortization is the most available for government backing. In addition, the government will only insure 95% of the value of the home, forcing buyers to find the last five percent as a down payment.

Mortgage insurance protects lenders from borrowers who default by making up the difference needed to repay the loan of the sale of the property doesn't cover the debt. All federally regulated lenders (banks, credit unions, and mortgage companies) must have mortgage insurance on loans where the buyer's down payment is less than 20% of the price. The government backs the insurance, whether it's through CMHC or private insurers.

There is also a new stipulation that buyers maintain a consistent minimum credit score. Of note is that these new requirements don't affect mortgages currently in place by homeowners.