Are you curious about the new downpayment rules for buying a house in Ontario & Canada? The new liberal government has taken steps to protect people against themselves by bringing in new rules for a downpayment when buying a home. It’s specifically aimed at the Toronto and Vancouver markets as in areas like here in Barrie, its a much smaller concern. So what are the new rules?
The way the system is before these new rules is that anyone putting down less than 20% of the value of the home have to have it insured by CMHC. The minimum they will allow someone to put down as a downpayment is 5% of the purchase price. This was for whatever the price of the home was up to $1,000,000. After $1,000,000 they require 20% as a downpayment no matter what.
For those buying a home under $500,000 the rules haven’t changed at all. They can still put down 5% of the purchase price. So a home priced at $400,000 requires a $20,000 downpayment. For those buying a home in Barrie, that means that a large percentage of those looking for a new home won’t be affected by these new rules.
For those buying a home over $500,000, they will be required to put down 10% for every dollar over $500,000. So if someone buys a home at $600,000 they will be required to to put down 5% for the first $500,000 and 10% for the remaining $100,000. That means the total downpayment will have to be $35,000. Under the old rules they could have purchased the home with a $30,000. Now you’ll need to save an extra $5,000.
So what will this mean? Some are predicting it will have minimal affect and others feel there will be a rush on people buying real estate. That should only be an issue south of Newmarket where homes priced above $500,000 are much more common.
With that being said, if you do want to avoid having to put down that extra money when buying a home over $500,000 then you want to make sure you do it before February!