Down Payment to Rise to 10% on Homes Over $500,000
Federal Finance Minister Bill Morneau announced changes to the CHMC 5% down payment program to take affect February 15, 2016. The government backed Canada Mortgage & Housing Corporation's program provides mortgage insurance to Canadians through lending institutions and is looking to reduce it's exposure in the market place by requiring buyers to increase their equity portion.
The Liberals have always expressed concern that home prices in certain Canadian real estate markets may be overheated, so they are increasing the minimum down payment required on a home in Canada from 5% to 10% on the portion of the purchase price over $500,000.
For a $600,000 home, the new 10% downpayment rule will apply only to the $100,000 above the $500,000 limit, not on the entire $600,000. That works out to 5% on the $500,000 purchase price ($25,000) and 10% on the next $100,000 ($10,000). The new total down payment will become $35,000 or 5.8% of the total purchase price, compared with the current $30,000 down payment requirement. See the chart below for various down payment examples.
The chart below shows exactly how down payments are affected for each home price category:
How Will This Affect the Calgary Real Estate Market?
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