Insurable Housing Loan Regulations

Marginal note:Low ratio loans

6 A low ratio loan must meet the following criteria:

• (a) the loan agreement must establish scheduled principal and interest payments that will begin reducing the outstanding principal in accordance with the overall amortization schedule agreed to at the making of the loan, commencing on

  • (i) the day on which the loan is funded,

  • (ii) the day on which the agreement of purchase and sale closes, or

  • (iii) the day on which the improvement, conversion or development of the eligible residential property is completed;

• (b) if at the time the loan is approved, its principal amount, together with the outstanding balance of any loan having an equal or prior claim against the eligible residential property against which it is secured, is greater than 60% of the value of the eligible residential property, at least one of its borrowers or guarantors must have a credit score that is greater than or equal to 580;

• (c) if the loan is part of a pool of loans on the direct basis of which marketable securities are issued, any securities issued on the direct basis of the pool after July 1, 2016 must be guaranteed under subsection 14(1) of the Act; and

• (d) if the loan is not part of a pool of loans on the direct basis of which marketable securities are issued,

  • (i) the loan must be insured on an individual basis on either the day on which it is funded or the day on which additional money is advanced to the borrower as part of the loan’s refinancing,

  • (ii) for any given day, for at least one day in the six-month period prior to that day, the loan must have been part of a pool of loans that meets the criterion set out in paragraph (c) or have not been insured,

  • (iii) the loan must have been in arrears, have been insured when it fell into arrears and since remained insured, and, as a result, not be eligible to be part of a pool of loans, or

  • (iv) the loan must belong for insurance purposes to a portfolio of loans with the Corporation and at least 95% of all portfolio insured loans of the lender with the Corporation must meet the criterion set out in paragraph (c) or subparagraph (ii) or (iii).