INCREASE in Required Downpayment from CMHC- Effective Feb/15/2016

[MortgageQueen]

Finance Minister Bill Morneau announced the new down payment structure for government-backed mortgages early Friday. Effective February 15th, the minimum down payment for the portion of a house above $500,000 (if applicable) will be 10%. If the house costs less than $500K, the min is still 5%.

HOWEVER. . . that 10% is only for the portion ABOVE the $500k amount

i.e. House cost $600k

You will be required to come up with 5% of the first $500k = $25k
Then 10% of the additional $100k = $10k

Any questions, let me know.

[Giseledta]

personally I think this is a good thing.

[maggiespice]

Very interesting. I too think that is a wise thing. After all when you get into that kind of money, I feel if all you can afford is the very minimum down payment, than later on down the road you may run into trouble by not being able to make the Mortgage payments at all.

With the exception of my first home, I would always put minimum 25 percent down plus more. (I refused to give CMHC a penny, as this too is nothing but a money grab).

[Frugalbigmama]

Very interesting. I too think that is a wise thing. After all when you get into that kind of money, I feel if all you can afford is the very minimum down payment, than later on down the road you may run into trouble by not being able to make the Mortgage payments at all.

With the exception of my first home, I would always put minimum 25 percent down plus more. (I refused to give CMHC a penny, as this too is nothing but a money grab).

Same! Even considering buying a rental unit now and still will put 25 down I think

[MortgageQueen]

Same! Even considering buying a rental unit now and still will put 25 down I think

Good for You! Generally, it's good to have at least 20% down on a rental anyways.

[brunt]

Down payments up, interest rates up, oil down. Not good for future price of real estate. About darned time.

The house in which I was born is in a smallish town with little prospects in the way of employment. The house was purchased brand new in 1962 for the price equal to two years of my father's pay. He was a high school dropout working in a semi-skilled job. The last time that this house sold (a couple of years ago), it went for a price equal to four times the pay that is average for my field, with a Ph.D. in Electrical Engineering. Same land, worse job situation, house subject to half a century's worth of decay, effectively well over twice the price in real terms. This makes no sense.

Zero down payments and forty year amortizations were outright stupid. Five percent down payment is not enough. And of course, CMHC is an abomination that should not exist in its current form - people don't realize that it protects banks, not homeowners.

So, a positive step, but only one of many that need to happen to have some semblance of sanity come back to the housing market.

[xbbx]

I havent bought a home yet, and dont understand the process... but i just feel this wouldn't stop the foreign investors buying homes in Vancouver, or helping with the increasing prices.

[MortgageQueen]

Yes, you're right Xbbx. It doesn't stop foreign investors at all. (That's politics for you!) It's more to curb Canadians in putting themselves in dangerous position of over extending themselves. . . although only minimally.