Changes in down payment requirements
Effective February 2016, the federal government has made some slight changes to downpayment requirements when purchasing a new home. The new requirements are:
1) 0-$500,000: buyers will still only require a 5% down payment.
2)$500,000 – $1,000,000 : buyers will now require 10% down payment (previously it was only 5%)
3) $1,000,000 + : buyers still require 20% down.
With ever increasing prices of homes, it is important that the government continue to put these rules in place to ensure first time home buyers dont get themselves in too deep should interest rates go up or house prices decrease substantially.
However, keep in mind if you are purchasing in the 500,000-1,000,000 range, you only need 10% down on the amount over $500,000. For example: a $600,000 home requires ($500,000*.05=$25,000) + ($100,000*.1= $10,000) = $35,000 down payment. As opposed to the only ($600,000*.05) = $30,000 that was required before.
