For the sixth time since the financial crisis in 2008 Canada’s top banking regulator is making it harder for Canadians to qualify for a mortgage. Starting in January 2018 Canadians applying for a new mortgage will be subject to a stricter set of rules to prove they can afford the loan.The most significant change is to guidelines around the mortgage stress test. Now all new mortgage applicants, regardless of down payment amount, will be subject to it. This stress test also includes those with an existing mortgage who choose to switch banks once their term is over.Now financial institutions require all borrowers to qualify at the greater of the two, either the five-year benchmark rate published by the Bank of Canada or the contractual mortgage rate plus two percentage points.Previously only those with less than a 20 per cent down payment had to undergo a stress test to show they could make their mortgage payments at a higher rate. Those borrowers still require mortgage insurance provided usually though the Canada Mortgage and Housing Corporation (CMHC).The new guidelines, announced back in October 2017, are published by the Office of the Superintendent of Financial Institutions Canada (OSFI) in the Residential Mortgage Underwriting Practices and Procedures.OSFI Superintendent Jeremy Rudin, in a press statement, says these rules are needed to “reinforce a strong and prudent regulatory regime for residential mortgage underwriting in Canada.” OFSI also makes clear that financial institutions must adhere to these rules going forward, which are “reflective of risk and are updated as housing markets and the economic environment evolve.”There are more guidelines for lenders as well. All federally regulated financial institutions are also prohibited from arranging a mortgage with another lender, or a combination of a mortgage and other lending products, in any form that circumvents the institution’s maximum Loan to Value (LTV) ratio. This means banks can’t arrange other unsecured loans that make the borrower appear to have a larger down payment.The good news for current homeowners is these new rules only affect new mortgage applications. If your mortgage is coming up for renewal, these changes won’t affect you if you stay with your current bank.If you’re shopping for a home right now beware that your purchasing power will be lower than what it was prior to 2018. For first time homebuyers and those applying for a new mortgage, forecasters say these new rules will affect your affordability by as much as 15 per cent.They also predict existing home sales will fall by up to five per cent and home prices will fall another up to four per cent, because of the new mortgage rules.From a personal finance perspective I applaud these new rules for protecting Canadians who are stretching themselves to the financial limits to get into their dream home. As I have been saying for years, you should always calculate your affordability two percentage points higher than what the bank offers you, and pay your mortgage at that rate as well. Remember, even if the bank offers you a large mortgage it’s not always financially prudent to take it.Rubina ahmed-haq is a journalist and personal finance expert. She is HPG’s Finance Editor. She regularly appears on CBC Radio and TV. She is a contributor on CTV Your Morning and Global Toronto. She has a BA from York University, received her post graduate journalism diploma from Humber College and has completed the CSC. Follow her on Twitter @alwayssavemoney.