Breaking News - Mortgage Down Payment Change - Calgarypuck Forums - The Unofficial Calgary Flames Fan Community

Mortgage Made Easy · 12-11-2015, 10:10 AM

Breaking News - Finance Minister Bill Morneau announced the plans to increase down payment effective Feb 2016.

Read Full Article

The down payment change is:

5% up to $500,000 purchase
10% of the amount over $500,000 up to $1M

Example: $750,000 purchase will require a down payment of $25,000 on the $500k and $25,000 on the balance of $250k.

ken0042 · 12-11-2015, 10:16 AM

What about for the portion over $1M?

Not that I'll be in that market anytime soon.
Edit- now I see that over $1M is 20% down.

Frequitude · 12-11-2015, 10:18 AM

I thought Flaherty already did this a couple years ago?

The Yen Man · 12-11-2015, 10:47 AM

Think the Flaherty increase was for secondary houses. Primary residence rules were untouched if I remember correctly.

Wish they would go further and just make 10% mandatory as a starting point.

HotHotHeat · 12-11-2015, 10:50 AM

Does this really hold any weight? I've bought and sold three homes in the past 2 years, the bank seems to love using 'gift letters' to get around creative down payment financing.

Mortgage Made Easy · 12-11-2015, 10:50 AM

Quote:

Originally Posted by ken0042

What about for the portion over $1M?

Not that I'll be in that market anytime soon.
Edit- now I see that over $1M is 20% down.

Down payment is minimum 20%. The down payment scales depending on purchase price and lender.

Example: a $1M purchase is 20% down payment. A purchase of $2M is going to be approx. 35%. There are exceptions to the guideline as it is based on overall assets and risk of covenant.

SeeGeeWhy · 12-11-2015, 11:55 AM

Sorry, I am reading this as seeing the minimum down payment is now effectively 5% on houses under 500k. Does this mean you do not require CMHC insurance if you have 5% down or does the 20% down rule still apply for that?

MillerTime GFG · 12-11-2015, 12:00 PM

Quote:

Originally Posted by SeeGeeWhy

Sorry, I am reading this as seeing the minimum down payment is now effectively 5% on houses under 500k. Does this mean you do not require CMHC insurance if you have 5% down or does the 20% down rule still apply for that?

Mortgage insurance is still required for < 20% down purchases.

Here's a link for some FAQ: http://www.fin.gc.ca/afc/faq/hdpmeh-mfperpc-eng.asp

GGG · 12-11-2015, 12:05 PM

Quote:

Originally Posted by The Yen Man

Think the Flaherty increase was for secondary houses. Primary residence rules were untouched if I remember correctly.

Wish they would go further and just make 10% mandatory as a starting point.

Why? Home ownership and forced savings is good for people in general. It's also insured so risk to banks is low. Just set the premiums on Cmhc sufficient to cover default.

bizaro86 · 12-11-2015, 12:28 PM

Be interesting to see if this affects the move up market here, the 750-1mm price point is already hurting in Calgary, I think.

MrCallahan · 12-11-2015, 12:37 PM

I could see this affecting the homes in the $500-600k range, might push owners to sell it just under the $500k range to reach a wider range of buyers.

Winsor_Pilates · 12-11-2015, 12:45 PM

Shouldn't have a huge effect; there aren't too many buyers over $500,000 only putting 5% down anyway. I article I read estimated 1% of buyers are in that catagory.

Bill Bumface · 12-11-2015, 12:51 PM

Quote:

Originally Posted by HotHotHeat

Does this really hold any weight? I've bought and sold three homes in the past 2 years, the bank seems to love using 'gift letters' to get around creative down payment financing.

Banks that allow this should have people lose their jobs and whatever certifications that allow them to issue mortgages. If it's a corporately condoned practice, executives should be charged for it.

These rules are important to protect people from losing their houses, and also keeping artificial inflation of prices for everyone due to loose credit, and it seems so slimy how banks will do anything to get you to sign a massive loan you will be paying back the rest of your working life.

darklord700 · 12-11-2015, 12:57 PM

The rule change will affect mostly highly leveraged speculators/investors. Those with like $100K cash and could have bough 5 revenue properties before and now can only buy 3 or 4.

stampsx2 · 12-11-2015, 01:35 PM

To clarify is this only for first time home buyers? I thought it was 20% for cmhc insured.

MrMastodonFarm · 12-11-2015, 01:42 PM

Quote:

Originally Posted by HotHotHeat

Does this really hold any weight? I've bought and sold three homes in the past 2 years, the bank seems to love using 'gift letters' to get around creative down payment financing.

ken0042 · 12-11-2015, 01:43 PM

Quote:

Originally Posted by MrCallahan

I could see this affecting the homes in the $500-600k range, might push owners to sell it just under the $500k range to reach a wider range of buyers.

I thought that at first, then realized for a $600k house this now raises the minimum down payment from $30K to $35K. It would be different if it was all 10%, and you'd go from $30K to $60K.

ranchlandsselling · 12-11-2015, 02:15 PM

Quote:

Originally Posted by ken0042

I thought that at first, then realized for a $600k house this now raises the minimum down payment from $30K to $35K. It would be different if it was all 10%, and you'd go from $30K to $60K.

Agreed, I think I mentioned it in the other real estate thread but seems like a half measure. We put 5% down on our current residence and it was because I didn't want to move more cash around. Really buying a 499k house means a $24,950 downpayment and a $501k house means a $25,100 downpayment, who cares. Even looking at the higher amounts it doesn't seem like much of a difference.

Garth Turner is happy to point out on his blog how much this will impact Calgary as usual. I'm not sure how one could think this makes much difference in Calgary vs. Toronto and Vancouver where the avg price is so much more.

OMG!WTF! · 12-11-2015, 02:52 PM

Quote:

Originally Posted by ranchlandsselling

Garth Turner is happy to point out on his blog how much this will impact Calgary as usual. I'm not sure how one could think this makes much difference in Calgary vs. Toronto and Vancouver where the avg price is so much more.

I think it targets the condo market in TO and Vancouver which is fantastically over heated. There are literally no single family homes at 500k in those cities and only a small market between 500k-1 million. Everything over 1 million is still 20% down. So single family homes aren't as drastically effected as they are in Calgary where a lot of our single family market is between 500k-1 million.

The colossal land transfer tax in TO didn't slow things down so I doubt this will.

MillerTime GFG · 12-11-2015, 03:01 PM

Quote:

Originally Posted by stampsx2

To clarify is this only for first time home buyers? I thought it was 20% for cmhc insured.

Not just first time buyers. Any purchase north of $500,000 will be subject to these new rules (excluding rental purchases which are minimum 20% down).

Quote:

Originally Posted by ranchlandsselling

Agreed, I think I mentioned it in the other real estate thread but seems like a half measure. We put 5% down on our current residence and it was because I didn't want to move more cash around. Really buying a 499k house means a $24,950 downpayment and a $501k house means a $25,100 downpayment, who cares. Even looking at the higher amounts it doesn't seem like much of a difference.

Garth Turner is happy to point out on his blog how much this will impact Calgary as usual. I'm not sure how one could think this makes much difference in Calgary vs. Toronto and Vancouver where the avg price is so much more.

If they didn't use a scale, it would have a large impact on pricing for the listings in the $500,000-$550,000 range, as they'd eliminate a lot of potential buyers because of the 500k down payment wall. Houses with realistic market values of $510,000 would be enticed to list at 499k.