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Down Payment Changes Coming

Not as Bad as You Think

By Jim on Jan 28, 2016

Late last year Finance Minister Bill Morneau announced that there will be new down payment requirements coming into effect on February 16, 2016. But is it really as bad as some people think?

Rampant speculation around the proposed change pointed to an increase in the minimum down payment required from 5% to 10%. The truth is that the actual change going into effect is much less painful. Here is how the change will really shake out and who it will effect:

The first $500,000 in a purchase will require a 5 percent down payment, while everything over $500,000 will require 10%. We already know that once you hit $1M you need a full 20% anyways, so the change really only effects people that buy properties priced between $500,000 and $999,999. The weighted effect of the total down payment required within this range is illustrated in the chart below.

 

 

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

 

As you can see, it is a much softer landing than the increase to a minimum 10% down that many people mistakingly assumed was happening...so rest east : )

If you have any questions about this change and how it could effect your plans to purchase your first home or upgrade in the near future, please don't hesitate to contact me at 403-837-7542.

Jim

Call Jim Henheffer today!

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Calgary, Alberta, T2G 0T1
Phone : 403–837–7542
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