As of February 15, 2016, the Canada Mortgage and Housing Corporation (“CMHC”) has increased the minimum down payment required for higher-priced homes across the country.
A home buyer with at least a 20% down payment is exempt from purchasing mortgage insurance through CMHC. Historically, CMHC required a minimum down payment of 5% to qualify for its insurance program.
Recently, CMHC has increased this minimum down payment to 10% for any portion of a mortgage that is over $500,000.00. Additionally, all properties over $1,000,000.00 require a minimum down payment of 20%. As such, CMHC rules do not apply to purchases over one million dollars.
It is expected that the new rules will have the largest impact in the large urban housing markets such as Toronto and Vancouver. The rules will also impact purchasers of higher end homes in smaller urban centres such as Guelph. The bottom line is that consumers looking to purchase homes over $500,000.00 may be forced to save for a few more years before CMHC is able to insure such mortgages.
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