OTTAWA - The days of zero down and a 40-year mortgage are likely over for Canadians. Starting 15 October, the federal government will no longer guarantee a four-decade amortization with no down payment.

The government announced this week that mortgages will be limited to 35 years, require a minimum five per cent down payment, and be federally insured for only 95 per cent of the value of the home. At the same time, anyone borrowing mortgage funds must have a good credit rating and demonstrate that their debt servicing costs are not greater than 45 per cent of gross income.

At least one critic opined that with the Canadian housing market just beginning to cool after more than five years of rapid growth, the timing of this government decision will likely slow housing sales even more and depress home prices.

Liberal MP Garth Turner, the author of a book warning about a possible Canadian housing downturn, says the government's decision could trigger a devaluing of homes by about 15 per cent nationally and as much as 30 per cent in boom towns like Edmonton, Calgary and Vancouver. It could also prompt Canadians to move quickly to beat the October deadline.

The federal finance department said forthcoming mortgage rule changes are designed to avoid any mortgage crisis that could mirror the sub-prime mortgage fiasco in the U.S., rather than pointing to any fundamental problems in the Canadian system.