New Minimum Down Payment Rules Effective February 15, 2016

This past December, Finance Minister Bill Morneau announced changes to the rules for government-backed mortgage insurance. Effective February 15th, the minimum down payment for new insured mortgages will increase from 5% to 10% for the portion of the house price above $500,000. The minimum down payment will remain at 5% for homes with a purchase price of $500,000 or less.

“The Government’s role in housing is to set and maintain a framework that is equitable, stable and sustainable. The actions taken today prudently address emerging vulnerabilities in certain housing markets, while not overburdening other regions. They also rebalance government support for the housing sector to promote long-term stability and balanced economic growth.”

“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. It also protects all homeowners, including many middle class Canadians whose greatest investment is in their homes.”

– Bill Morneau, Minister of Finance

Press Release from Department of Finance Canada:
http://www.fin.gc.ca/n15/15-088-eng.asp

Department of Finance Canada, Frequently Asked Questions:
http://www.fin.gc.ca/afc/faq/hdpmeh-mfperpc-eng.asp

Here is a chart to show how the changes will impact home buyers:

Purchase Price

5% Min.
Down Payment

Portion Above $500K

10% on Portion Above $500K

Total Down Payment

Total as % of Purchase Price

$400,000

$20,000

n/a

n/a

$20,000

5%

$500,000

$25,000

n/a

n/a

$25,000

5%

$600,000

$25,000

$100,000

$10,000

$35,000

5.83%

$700,000

$25,000

$200,000

$20,000

$45,000

6.43%

$800,000

$25,000

$300,000

$30,000

$55,000

6.88%

$900,000

$25,000

$400,000

$40,000

$65,000

7.22%

$1 million*

n/a

n/a

n/a

$200,000

20%

*Properties valued at $1 million and above require a minimum down payment of 20%

If you are thinking of moving, Team Masterson can provide a free market evaluation of your existing home or can help you find your next ‘dream’ home. Just give us a call or send us an email.

Team Masterson – Service. Results. Experience Our Difference!
Scott Masterson     647.967.9327    scott@teammasterson.com
Susan Masterson   647.388.4471    susan@teammasterson.com

This entry was posted in Buying and Selling, Home Finance, Investing.