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Finance Minister Bill Morneau recently announced that there will be new down payment requirements coming into effect on February 16, 2016. Individuals buying properties between $500,000 and $1 million will now be required to make a larger down payment than before. The first $500,000 will require a 5 percent down payment, while the next $500,000 will require a 10 percent down payment.

Existing Eligibility Rules

Eligibility Rules as of Feb. 15, 2016

Home purchase price

Minimum

down payment

percentage

Minimum

down payment

amount

Minimum

down payment

percentage

Minimum

down payment

amount

Under $500,000

5 percent

Up to $25,000

5 percent

Up to $25,000

$600,000

5 percent

$30,000

5.8 percent

$35,000

$700,000

5 percent

$35,000

6.4 percent

$45,000

$800,000

5 percent

$40,000

6.9 percent

$55,000

$900,000

5 percent

$45,000

7.2 percent

$65,000

$999,000

5 percent

$50,000

7.5 percent

$75,000

$1 million and up

20 percent

$200,000

and up

20 percent

$200,000

and up

The rampant speculation around the policy change was that Ottawa would impose a flat 7 to 10 percent down payment for properties between $500,000 and $1 million. First time home buyers in particular were concerned about how the policy change would affect them but the majority of homes in Canada still cost less than $500,000 and will not be affected.

These measures were implemented to require buyers of expensive homes to commit more money outright to their purchases. This ensures that they are able to actually afford the homes they are purchasing by requiring them to purchase a larger percentage of it outright.. Buyers who are negatively affected by the change will need to consider selling other assets to boost their down payment or delay purchasing a home until they are able to save enough to meet the new down payment requirements. The Department of Finance stated that these changes are designed to maintain a healthy, competitive and stable housing market.

Tim Lacroix of CGY Mortgage has been helping Calgarians achieve their homeownership dreams for years. To find out how he can help you call today at 403.648.1541 and visit timlacroix.com.