Finance minister changes down payment rules
On the 11th of December 2015 the Finance Minister Bill Morneau changed the rules for government-backed mortgage insurance, by adjusting the amount of down payment required for mortgages in access of $ 500 000. In future a 10 percent down payment will be required, up from 5 percent. For Mortgages under $ 500 000 a required five percent down payment remains unchanged, existing mortgages also remain unchanged.
For example: A $750,000 home will now require $50,000 down -- 5% for the first $500,000 and 10% down for the remaining $250,000.
The changes are meant to reduce taxpayer exposure while supporting long-term stability of the housing market, according to the ministry.
Quick Facts
- Federally regulated lenders are required to obtain mortgage insurance when the down payment is less than 20% of the purchase price of a property.
- Properties valued at $1 million and above require a minimum down payment of 20%.
- The average price of homes sold in October 2015 through the Canadian Real Estate Association’s Multiple Listing Service® (MLS) system was about $453,000 across Canada.
“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.”
