Effective February 15, 2016 there will be new down payment rules, but this will not impact buyers below the $500,000 threshold. I actually believe that this is a prudent move by the government to ensure we as tax payers are not on the hook for people buying or building expensive homes over $500,000 and then defaulting on the mortgage payments because their eyes were bigger than their tummies.
The down payment for new insured mortgages that will increase from 5% to 10% is for the portion of the house price above the $500,000 threshold. This is the only change being implemented.
i.e.: A $650,000 home will now require $40,000 down -- 5% for the first $500,000 and 10% down for the remaining $150,000.
Subsequently, properties up to $500,000 will continue to require a minimum 5% down. Properties in excess of $1 million will still require 20% down.
"The changes are meant to reduce taxpayer exposure while supporting long-term stability of the housing market, according to the ministry. This measure will increase homeowner equity, which plays a key role in maintaining a stable and secure housing market and economy over the long term,” Morneau said. “It also protects all homeowners, including many middle class Canadians whose greatest investment is in their homes.” (Finance Minister Bill Morneau - press release)
I applaud the governments' foresight in making strides to ensure that our housing market stays stable to inspire continued real estate investment in what has historically been known as a safe haven for consumers.
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