The Lowdown on Downpayments in Canada
As of February 15, 2016, there is a new downpayment rule in effect that increases the amount of the downpayment necessary to buy a home with a sale price of more than $500,000.
The minimum downpayment on a home used to be 5% of the purchase price. The new rule stipulates that homebuyers must now apply a minimum of 10% downpayment, but only on the portion of the purchase over $500,000.
Let's look at an example on how this affects a purchase of a home priced at $650,000:
5% down payment on the first $500,000: $25,000
10% down payment on the remaining $150,000: $15,000
Total minimum down payment on a $650,000 home: $40,000
Whereas before the downpayment required prior to this change would have been 5% x $650,000 or $32,500, now the buyer would have to come up with an extra $7,500 to purchase this home.
The minimum down payment for properties up to $500,000 remains unchanged at five per cent, as does the minimum down payment of 20 per cent for homes priced at more than $1 million. If you are a first time homebuyer aquiring a property less than $500,000, the new rules won't affect you.
Questions about the new rule? Need an update on property values in the busy spring market? Simply pick up the phone and call - there is no obligation at all!
As of February 15, 2016, there is a new downpayment rule in effect that increases the amount of the downpayment necessary to buy a home with a sale price of more than $500,000.
The minimum downpayment on a home used to be 5% of the purchase price. The new rule stipulates that homebuyers must now apply a minimum of 10% downpayment, but only on the portion of the purchase over $500,000.
Let's look at an example on how this affects a purchase of a home priced at $650,000:
5% down payment on the first $500,000: $25,000
10% down payment on the remaining $150,000: $15,000
Total minimum down payment on a $650,000 home: $40,000
Whereas before the downpayment required prior to this change would have been 5% x $650,000 or $32,500, now the buyer would have to come up with an extra $7,500 to purchase this home.
The minimum down payment for properties up to $500,000 remains unchanged at five per cent, as does the minimum down payment of 20 per cent for homes priced at more than $1 million. If you are a first time homebuyer aquiring a property less than $500,000, the new rules won't affect you.
Questions about the new rule? Need an update on property values in the busy spring market? Simply pick up the phone and call - there is no obligation at all!