new Down Payment Rules
New Down Payment Rules are Here!
Are you curious about the new down payment rules for buying a house in Canada? The new Liberal government has taken steps to protect people against them selves by bringing in new rules for a down payment when buying a home.So,what are the new rules?
Anyone putting less than 20% of the value of the home must have their mortgage insured by CMHC (Canada Mortgage& Housing Corp) or one of the other mortgage loan insurance providers. The minimum they will allow someone to put down is 5% of the purchase price. Under the system before the rule change this applied to whatever the price of the home was up to $999,000.00. For $1,000,000.00 and up, the requirement is at least 20% down,no matter what.
For those buying a home under $500,000.00, the rules haven't changed at all. They can still put down 5% of the purchase price. For example,a home priced at $400,000.00 requires a $20,000.00 down payment.
Those buying a home over $500,000.00 are now required to put down 10% for every dollar over $500,000.00. If someone buys a home for $600,000.00, they will be required to put down 5% of the first $500,000.00 and 10% of the remaining $100,000.00. That means the total down payment will be $35,000.00 compared to the $30,000.00 it would have been under the old rules. Now you'll need to save an extra $5,000.00. An $800,000.00 home requires $55,000.00 as opposed to$40,000.00 previously.
Hopefully this is not a huge impact for most buyers, but definitely something you need to know when you are ready to go shopping.
Brought to you by Colleen Flynn & Margaret Melling of Select Mortgage Corp