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Finance Minister, Bill Morneau, announced changes to the minimum down payment required on owner occupied homes this morning.

Effective February 15th, 2016, homes between $500,000 and $1 Million will have a sliding scale utilized for the minimum down payment required. On the first $500,000 of purchase price, 5% down is still the minimum. On any amount between $500,000 and $1 Million, 10% down will be required on this portion. Anything over $1 Million requires a 20% down payment, a policy that has been in place for over a year now.

For example, a purchase price of $700,000 will now require a down payment of $45,000 (5% on the first $500k = $25k; plus 10% on the remaining $200k = $20k). This is a $10,000 increase to the 5% down payment currently required on a $700,000 home.

Min Down Payment Chart

Minimum required down payment by price point, before and after Feb. 15

 

“The changes are meant to reduce tax payer exposure while supporting long-term stability of the housing market”, according to the ministry.

Any purchase contracts currently in place, or entered in to prior to February 15th, will be subject to current policies and only a 5% down payment is required even if completion is after February 15th.

This is one of many changes to the housing market that we have seen rolled out since 2008. Only time will tell how this one will play out. The feds are stating that these changes will only affect approximately 1% of the market. In markets like Vancouver and Toronto, I believe that percentage will be slightly higher.

If you’re curious how these changes affect you, give me a call this week.

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