As of today, February 16, 2016, home buyers in Canada are now required to put down more than the previously allowed minimum of 5% on the purchase price of a home over $500,000. This legislation was put in place by the Canadian government in an effort to cool down the red-hot housing markets in cities like Toronto and Vancouver and to protect home buyers from getting in over their heads by buying an expensive house with a small down payment and a huge mortgage that might spell financial disaster for them should interest rates rise.
Interestingly, the advent of the new rule seems to have prompted a bit of a last-minute buying frenzy as some home buyers sought to purchase property before the rule kicked into effect. The CBC news reports one Toronto real estate agent as saying that it drove traffic like crazy on an unrenovated row house with no parking that she had listed, resulting in 103 showings, 13 offers, and a final selling price $149,000 over the asking price! (http://www.cbc.ca/news/canada/toronto/toronto-new-mortgage-rules-1.3448550)
So does this mean that if you want to buy a $600,000 home, you now have to pay $60,000 (10%) down instead of $30,000 (5%) down? Well, not exactly. While most of us will not be in the market for properties over half a million dollars, the good news for those that are is that ONLY the portion of the price OVER $500,000 is subject to the new 10% down payment rule. This means that the new down payment required is $35,000 (5% of the first $500,000 = $25,000 plus 10% of the remaining $100,000 = $10,000), which is only $5,000 more than what was permitted under the old regulation.
That's not so bad now, is it? Especially when you consider that the minimum down payment required on a house over $1 million is 20%! :)