As you have likely already heard on the news, earlier this morning the Finance Minister announced changes to the minimum down payment on houses valued over $500,000. Effective February 15th 2016, the minimum down payment for new insured mortgages will increase from 5 per cent to 10 per cent for the portion of the house price above $500,000 (NOT THE FULL PURCHASE PRICE). The move is an effort to curb the rising real estate prices in Toronto and Vancouver.
For example, under the new rules, a buyer looking to purchase a home priced at $750,000 would need to have a minimum down payment of $50,000 which is calculated as follows: $25,000 (5% of $500,000) plus $25,000 (10% of $250,000). Prior to the rule change, the borrower could have purchased the same home with a total down payment of $37,500 (5% of $750,000). The new rule changes result in the purchaser having to put an additional $12,500 down on the property.
The change will NOT affect borrowers who have already entered into an agreement to purchase or build a home, or borrowers who enter an agreement before the February 15th 2016 deadline.