The federal government, in its attempt to avoid a housing crisis such as the U.S. is currently experiencing, have made some changes to the mortgage lending rules that you should be aware of. As of Oct. 15th 2008, no longer will one be able to purchase a home or condo with 0% down or be allowed a 40 year amortization. A minimum 5% downpayment will be required and maximum amortization of 35 years will be the limit. Also being eliminated are any high ratio interest only mortgages. A high ratio mortgage is any mortgage with a downpayment of less than 20% of the purchase price. This change also disallows high ratio home equity line of credits. Note: cashback mortgages will still be available so the option of buying without a downpayment will still exist, but at higher rates.

Although the changes are not officially taking place until October, many banks and mortgage lenders have already adopted these new rules for any new applications. Fortunately, there are still a few lenders waiting until mid October to enforce the new rules so the possibility is still out there if you move fast and wish to have the maximized amortization or the 0% down option.

Even though the mortgage rules appear to be a little unstable, currently rates are holding steady without many changes since the spring season. 5 year fixed rates are in the mid 5% range and variable or adjustable rate mortgages in the 4.15 - 4.25% range. As always, it’s best to shop around for the lowest rates and a brokerage such as Buyingblock does the work for you — at no cost!