New down payment rules will go into effective February 15, 2016.
“The Government’s role in housing is to set and maintain a framework that is equitable, stable and sustainable. The actions taken today prudently address emerging vulnerabilities in certain housing markets, while not overburdening other regions,” Finance Minister Bill Morneau said in a release. “They also rebalance government support for the housing sector to promote long-term stability and balanced economic growth.”
The minimum down payment for new insured mortgages will increase from 5% to 10% for the portion of the house price above $500,000, the finance ministry wrote. Minimum down payment for properties up to $500,000 will remain at 5%.
The changes are meant to reduce taxpayer exposure while supporting long-term stability of the housing market, according to the ministry.
“This measure will increase homeowner equity, which plays a key role in maintaining a stable and secure housing market and economy over the long term,” Morneau said. “It also protects all homeowners, including many middle class Canadians whose greatest investment is in their homes.”
Here is an example for a purchase of $600,000.
Amount over $500,000 = $600,000 - $500,000 = $100,000
Minimum downpayment = ($500,000 * 5% = $25,000) + ($100,000 * 10% = $10,000)
Total minimum downpayment = $35,000