Mortgage Blog
Canada's Mortgage Experts
New Down Payment Rules in February
January 5, 2016 | Posted by: Dana Stauber
House over $500,000? New down payment rules in February.
On February 15, 2016, minimum down payment rules are changing in Canada – for homes worth more than $500,000. The change is straightforward: for any portion of the house price over $500,000, buyers will need to provide 10% down payment for an insured mortgage. The minimum down payment for the first $500,000 will remain unchanged at 5%.
How much difference could it make? Here’s a simple example:
Right now, you could get a mortgage for a $750,000 home with a down payment of $37,500: a simple 5% of $750,000. Once the new rules kick in next month, you’ll need $50,000 down payment for the same house: 5% for the first $500,000 ($25,000), plus 10% for the $250,000 over the limit (another $25,000).
The change was announced in mid-December by the new Liberal Finance Minister, Bill Morneau. While most Canadian homebuyers will be unaffected, the move is designed to protect Canadian homeowners by ensuring a stronger equity footing in their homes.
You’ll need a mortgage approval before February 15 to qualify under the 5% rule, and your purchase must also close before July 1, 2016. If you’re planning on buying a house, let’s talk! Ph. 250-308-2847 or danastauber@invis.ca or go to my down payment calculator at downpayment.ca/dana-stauber to see how the changes may affect your purchase.
