NEW Mortgage Down Payment Rules
On December 11, 2015 the Federal government Finance Minister announced new down payment rules for home purchases. Effective February 15, 2016, the minimum down payment for new insured mortgages will be increased from 5 per cent to 10 per cent for the portion of the house price above $500,000.
For properties between $500,000 and $1 million, purchasers applying for an insured mortgage will now need to put up to an additional 2.5% of the purchase price down payment. Specifically, 5% down will be required on the first $500,000, and 10% down will be required on the next $500,000. The new rule doesn’t affect properties over $1 million because they don’t qualify for high-ratio mortgage insurance.
This policy increases the minimum down payment from 5 per cent to 10 per cent on the portion of the house price above $500,000. This policy does not change the 5 per cent minimum down payment for properties up to $500,000.
This measure applies only to new insured mortgage loans. Homeowners with an existing insured mortgage or those renewing existing insured mortgages will not be affected by this policy change as mortgage insurance is good for the life of any existing insured mortgage.
Federally regulated lenders are required to obtain mortgage insurance when the down payment is less than 20 per cent of the purchase price of a property.
Properties valued at $1 million and above require a minimum down payment of 20 per cent as mortgage insurance is not available.