Eligible Mortgage Loan Regulations (SOR/2012-281)

Marginal note:Definitions

• 1 (1) The following definitions apply in these Regulations.

  credit score

  credit score means a score that is

  • (a) issued by a credit reporting agency that is incorporated by or under an Act of Parliament or of the legislature of a province; and

  • (b) based on a scale that is substantially equivalent to a scale used on June 26, 2011 by a credit reporting agency that was at that time incorporated by or under an Act of Parliament or of the legislature of a province. (pointage de crédit)

  eligible residential property

  eligible residential property means a property consisting of one to four housing units, together with any associated property interests or real rights, structures and facilities. (immeuble résidentiel admissible)

  first-time home buyer

  first-time home buyer means an individual who, at the time of purchasing an eligible residential property,

  • (a) has never before purchased an eligible residential property in Canada;

  • (b) has not, in the calendar year in question or at any time in the four preceding calendar years, occupied as a principal place of residence an eligible residential property in Canada that was owned, whether jointly with another person or otherwise, by

    • (i) the individual, or

    • (ii) their current spouse or common-law partner; or

  • (c) is an individual who

    • (i) is living separate and apart from their spouse or common-law partner because of a breakdown of their marriage or common-law partnership,

    • (ii) has been living separate and apart from their spouse or common-law partner for a period of at least 90 days, and

    • (iii) began living separate and apart from their spouse or common-law partner in the calendar year in question or at any time in the four preceding calendar years. (acheteur d’une première habitation)

  funded

  funded means, in respect of a mortgage or hypothecary loan, that money under the loan has been advanced to the borrower. (financé)

  gross debt service ratio

  gross debt service ratio means the percentage of a borrower’s gross annual income that is required to cover the annual payments associated with the eligible residential property against which a mortgage or hypothecary loan is secured. (coefficient d’amortissement brut de la dette)

  high ratio loan

  high ratio loan means a mortgage or hypothecary loan that is secured by an eligible residential property and whose principal amount, together with the outstanding balance of any loan having an equal or prior claim against the eligible residential property, is greater than 80% of the value of the eligible residential property at the time the loan is approved. (prêt à ratio élevé)

  housing unit

  housing unit means a unit that provides living, sleeping, eating, food preparation and sanitary facilities for one household, with or without other essential facilities shared with other housing units. (unité de logement)

  loan for the addition of housing units

  loan for the addition of housing units means a mortgage or hypothecary loan that is secured by an eligible residential property, whose purpose is the improvement, conversion or development of the eligible residential property to increase the number of housing units that it contains and whose only other purpose may be the discharge of the outstanding balance of a prior loan against the property. (prêt pour l’ajout d’unités de logement)

  low ratio loan

  low ratio loan means a mortgage or hypothecary loan that is secured by an eligible residential property and whose principal amount, together with the outstanding balance of any loan having an equal or prior claim against the eligible residential property, is less than or equal to 80% of the value of the eligible residential property at the time the loan is approved. (prêt à faible ratio)

  newly built

  newly built, in respect of an eligible residential property, means that

  • (a) the property has never been occupied for residential purposes; or

  • (b) in the case of a condominium unit or a private portion of a divided co-ownership, the property has never been occupied for residential purposes other than during a period in which the borrower assumed occupancy on an interim basis before the registration of the condominium declaration or declaration of co-ownership or before taking possession. (nouvellement construit)

  quarter

  quarter means any period of three consecutive months beginning on January 1, April 1, July 1 or October 1. (trimestre)

  total debt service ratio

  total debt service ratio means the percentage of a borrower’s gross annual income that is required to cover their annual payments associated with housing and all other debts. (coefficient d’amortissement total de la dette)

  value of the eligible residential property

  value of the eligible residential property means the value that is ascribed to an eligible residential property by a mortgage or hypothecary lender or a mortgage insurer for the purpose of granting or insuring a mortgage or hypothecary loan and that is verified using a method that is generally accepted by prudent lenders, insurers or professional residential property appraisers. If the purpose of the loan includes the purchase of the property, the value must not exceed

  • (a) the purchase price of the property; or

  • (b) the purchase price of the property plus the estimated cost to the borrower of planned improvements to the property, if the purpose of the loan also includes those improvements. (valeur de l’immeuble résidentiel admissible)

• Marginal note:Verification of value

  (2) For the purposes of the definition value of the eligible residential property in subsection (1), generally accepted methods of verifying value include

  • (a) the use of a statistically reliable and up-to-date valuation model that assesses the value’s reasonableness;

  • (b) a fair-market-value appraisal by a professional residential property appraiser who is independent of the borrower;

  • (c) a drive-by appraisal; or

  • (d) a review of the value of comparable properties.

• Marginal note:Principal amount

  (3) For the purposes of these Regulations, the principal amount of a loan does not include any mortgage or hypothecary insurance premiums.