Recently CMHC and the federal government opted to make an increase in the amount of down payment that Canadians will require to purchase a home. The increase is in steps beginning at 500000 dollars, they left the starter market alone but increased how much the move up market will need for down payment in most cities. The exception to these will be of course Toronto and Vancouver where average prices for single family homes are well above the 500000 dollar mark.
New Mortgage Down Payment Break Down
The break down looks like this, for the first 500000 dollars in selling price you need to have 5% down payment or 25000 dollars. Every dollar over that amount will need to now have 10% down payment which at the full 999999.00 dollar mark equates to 7.5% in total or 75000 dollars, previously you would have seen that payment be only 50000 dollars so an extra 25000 or 50% more down payment. There are always lots of ways to work the numbers some will of course say that it’s a 150% change in down payment but in reality if you are buying a 500 to 900000 dollar property you should have more than 5% down payment.
What didn’t change is that anything over a million dollars as that has been in effect for some time, Vancouver with its 1.27 million dollar average price has long been feeling the pinch as banks have also set their limits own limits in place. On most banks sites you will see a graduated scale for houses over a million dollars. The first million is at 20% down payment, the next 250000 is at 35% down payment and anything over that amount you need 50% of the balance. In reality that million plus purchaser is in fact putting down closer to 35% over all making the properties loan to value average at 65% for most of these houses. Vancouver’s market has become a safe haven for foreign money and none of those buyers are using a Canadian bank for financing so not really showing up in the stats just driving up the prices.
Over all it’s a better move than having everything go to 10% down payment which it is believed would have shut down the housing markets in every city and not just slowed Toronto and Vancouver as it seems is their plan.