Karen and her husband Matthew were originally pre-approved for a mortgage in 2016. They were hoping to buy in Toronto for $725,000 and had the minimum down payment required ($47,250) plus all closing costs. However, when the mortgage rules changed, their affordability suddenly dropped to $610,000, even with their down payment being more than the required minimum now. They lost $115,000 in qualification practically overnight. As such, they began looking at “B-side”, or alternative lenders to fill that gap. The B-side has far more lax underwriting guidelines and can expose the couple to opportunities and risks that are not in their best interests. Fortunately, they decided against taking on sub-prime loans just to enter the market. But their situation highlights the avenues many buyers are forced to go through when they can’t get “A” money.

They left the housing market for a few months to reassess their option. When they came back in early February, they learned that CMHC premiums would be increasing and rates have now gone higher. It’s just not a good time to be a home buyer right now.