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11 Dec

Minimum Down Payment to buy a home in Canada has CHANGED!


Posted by: Leonore Claypool

We heard the rumblings and now it happened! Minimum down payment to buy a home in Canada has changed! At a press conference this morning the Finance Minister Bill Morneau, announced the Canadian government is making changes to the minimum downpayment in order to “encourage stability in the Canadian housing market.

Effective February 15th, 2016 for insured mortgages on properties between $500k and $1M. The new minimum down payment for insured mortgages is 5% for the first $500k and 10% on the portion of the price above $500k. 

So for example a property worth $700k would be 5% x $500k or $25k plus 10% x $200k or $20k for a total downpayment of $45k. Which is a $10k increase from only 5% as per the previous rules. The new downpayment rules apply to new home buyers and do not impact existing mortgage holders.

“An increase in home equity protects home owners, it protects middle class Canadians.” Bill Morneau,

The purpose of these new guidelines is said to help cool the housing market in Canada, with particular attention being focused on the hotter markets of Vancouver and Toronto. The government is trying to address future vulnerabilities by targeting higher priced homes while minimizing the impact to first time home buyers in moderate housing markets. “Our response isn’t being made out of fear, it is being made to manage potential risk appropriately, this is measured action aimed at creating a stable and effective housing market”.

Mortgage default insurance is required on all home purchases where the downpayment is less than 20%, while default insurance is capped at $1M. According to Morneau the changes will only impact one percent or less of the market.

For more information on how this may affect you please call or email me.