There's a new down payment rule now in effect, valid as of February 15, 2016, that increases the amount of the down payment necessary to buy a home selling for more than $500,000.
The minimum down payment on a home was previously a straight five percent of the purchase price, however as of December 2015 homebuyers must now apply a minimum of ten percent down on the portion of their purchase that's over $500,000.
The increase in down payment was most likely designed to cool down the hottest real estate markets in Canada that have average prices topping $500,000. For example, here's the difference in down payment for a $700,000 property:
5% down payment on first $500,000: $25,000
10% down payment on remaining $200,000: $20,000
Total minimum down payment on a $700,000 home: $45,000
The buyer in this example therefore needs to come up with an extra $10,000 for the down payment compared to the system before the change.
While first-time buyers will feel the pinch most, existing homeowners will typically already have that amount covered through their home equity. Questions about the new rule, or about your home financing in general? Simply pick up the phone and call – there's no obligation at all!