Bank of Montreal is the first large bank to stiffen rules against Canadian's after tariffs placed by Trump

BMO, one of Canada's major banks, is tightening its mortgage rules for self-employed Canadians in certain industries. This change will impact hundreds of thousands working in fields like steel, aluminum, and other sectors that BMO considers "high risk."

Under the new policy, self-employed borrowers in these high-risk industries will need to keep their monthly debt payments below 42% of their income to qualify for a mortgage. This is down from the previous 45% threshold.

While a 2% difference may not seem like much, it can have a big impact - especially in pricey housing markets like Toronto. For example, a household earning $200,000 per year would now only qualify to buy a home costing up to $1.27 million after a 20% down payment. That's about $180,000 less than the average price of a detached home in the city.

BMO says it's standard practice to consider broader economic factors when assessing mortgage applications. One expert told the Globe and Mail that the change makes sense, as it will help limit lending to those at a higher risk of defaulting.

While BMO is the only bank to announce this type of policy change so far publicly, the expert believes other lenders likely have similar rules in place for self-employed borrowers in high-risk industries.

This tighter mortgage qualification for certain self-employed Canadians is the latest sign that banks are being more cautious as economic uncertainty looms. Those who work for themselves in affected sectors may need to adjust their home-buying plans accordingly.

As your real estate partner, I can help you explore alternative financing options, such as seeking pre-approval from other lenders, that may better suit your situation. It's essential to stay informed and proactive in the current market conditions. Together, we can devise a strategic plan to achieve your homeownership goals, whether that involves finding a property within the new mortgage guidelines or considering other viable options. Please don't hesitate to reach out with any further questions or concerns.

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If you are looking to either Buy or Sell, contact me at 705-927-6236

Brad Sinclair, Sales Representative

Team Lead at The Brad Sinclair Team

Royal Heritage Realty

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