Down Payment

Finance Minister Announces New Minimum Down Payment Regulations

calendarDecember 15, 2015

peopleThe Mortgage Advisors

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Last week the Finance Minister announced some new regulations around minimum down payment required for purchasing a home.

Effective February 15, 2016, the minimum down payment for new insured mortgages will increase from 5% to 10% for the portion of the house price that is above $500,000.

“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,” Finance Minister Bill Morneau said in a release. “They also rebalance government support for the housing sector to promote long-term stability and balanced economic growth.”

If you recall the last change the Finance Minister placed around down payment was that homes with a purchase price over $1 million required 20% down payment.

If you are looking to purchase a property, here is an idea of the minimum down payment you will need to make come February 2016 when the rule change comes into effect:

Purchase Price Down payment Calculation Minimum Down Payment Required:
$ 350,000 5% x 350,000 $ 17,500
$ 500,000 5% x 500,000 $ 25,000
$ 650,000 5% x 500,000
10% x 150,000
$ 35,000
$ 800,000 5% x 500,000
10% x 300,000
$ 55,000
$ 950,000 5% x 500,000
10% x 450,000
$ 70,000
$ 1,000,000 20% x 1,000,000 $ 200,000


How do the new down payment regulations affect you?

Overall the new change will have minimal impact on most buyers. Markets that may feel the impact a little more would be Toronto and Vancouver where home values have skyrocketed in the past years.

The average first-time home buyer enters the market with an average purchase price of $293,000, and less than 1 in 10 first time buyers start off with a home valued more than $500,000.

Qualified borrowers who get approved before Feb 15, 2016 can still buy with only 5% down, others who want to wait will have to come up with a little more down payment.

Contact us today to speak to a qualified Ottawa Mortgage Broker and get ready to buy the house of your dreams.

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