Effective February 15, 2016, the minimum down payment for new insured mortgages will be increased from 5% to 10% on the portion of the house price above $500,000.
What this means:
- The required minimum down payment for a buyer who is purchasing a house for $600,000 will increase by $5,000. A $700,000 home will see a minimum down payment increase of $10,000
- The 5% minimum will still apply to any homes priced under $500,000, inclusive
- Any existing mortgages will not affected
- This will not affect anyone putting down 10% or more of the purchase price
The chart below will give you a visual of how the new mortgage rule will affect the new minimum down payment. In summary, you can expect an increase of $5,000 for every $100,000 above $500,000. A $1-million home will still require a minimum down payment of 20% as the Canadian Housing and Mortgage Corporation (CHMC) will only insure mortgages on homes priced under $1 million
The federal government and the CHMC have taken measures in the past several years to tighten mortgage rules in efforts to cool down the overly active housing market. Those efforts, however, have not been too effective.
Have questions about how the new mortgage rule will affect you? Give me a call, I would be happy to go over any of your questions in more detail. I am dedicated to helping you, whether you're looking to buy, sell, or invest in real estate.