Saturday, December 12, 2015

Mortgage Rules Will Tighten Feb 2016 On Homes Over $500K

Mortgage Rules Will Tighten on homes over $500K

The federal government is boosting the minimum down payment for higher-priced homes in Canada effective in the new year.
Mortgage Rules Will Tighten Feb 2016 On Homes Over $500K

Home buyers are currently required to put down a minimum of five per cent to qualify for Canada Mortgage and Housing Corporation insurance — protection that lenders insist on when providing a mortgage worth more than 80 per cent of the home's value.

Starting in February, CMHC will require a 10 per cent down payment on the portion of any mortgage it insures over $500,000. The five per cent rule remains the same for the portion up to $500,000.

Once the new rules are implemented in approx February  16-2016, 
however the higher threshold will only apply to the portion in excess of that mark. That means the minimum down payment for a home worth up to $1 million would be 7.5 per centsomeone looking to buy a $750,000 home would need to have a minimum down payment of $50,000, which is what you get when you add five per cent of $500,000 and 10 per cent of the remaining $250,000.

Banks are forbidden to provide "high-ratio" mortgages — when the amount being borrowed is more than 80 per cent of the home's purchase price — without taking out insurance for it.


David Gharat
Phone: 416-729-2333

CBC News Posted: Dec 11, 2015 9:19 AM ET (Business)

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