Mortgage Rules are Changing

Government of Canada Takes Action to Maintain a Healthy, Competitive and Stable Housing Market
December 11, 2015 – Ottawa, Ontario – Department of Finance


Finance Minister Bill Morneau today announced changes to the rules for government-backed mortgage insurance to contain risks in the housing market, reduce taxpayer exposure and support long-term stability. Effective February 15, 2016, the minimum down payment for new insured mortgages will increase from 5 per cent to 10 per cent for the portion of the house price above $500,000. The 5 per cent minimum down payment for properties up to $500,000 remains unchanged.

 

For example: 

Purchase price of $700,000

5% down payment on first $500,000 = $25,000

10% down payment on excess $200,000 = $20,000

 

Total minimum down payment required = $45,000

LTV of 93.57%

 

Canadians who already own a home will NOT be affected.

 

The Government continuously monitors the housing market and is committed to implementing policy measures that maintain a healthy, competitive and stable housing market. Higher homeowner equity plays a key role in maintaining a stable and secure housing market.

In making this announcement, Minister Morneau also highlighted the increases in guarantee fees for Canada Mortgage and Housing Corporation (CMHC)-sponsored securitization programs, announced today by CMHC. The Office of the Superintendent of Financial Institutions has also announced today its plans to update regulatory capital requirements for residential mortgages to ensure that capital requirements keep pace with market developments and risks. Taken together, today’s actions will strengthen the resiliency of Canada’s housing finance system to promote long-term stability and balanced economic growth.

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