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NEW DOWN PAYMENT RULES – FEBUARY 15, 2016

As many of you may be aware the minimum down payment rules for insured mortgages (generally less than 20% down) are changing as of February 15, 2016.

The changes will not affect most first time buyers in our area, as they only affect homes over $500,000.  The current minimum down payment for a home up to $500,000 is still 5%. It will however put more pressure on down payments for the higher valued homes.

Where the change comes in to play is on the amount of the purchase price between $500,000 and $1,000,000.  On that portion of the price the minimum down payment will be 10%.  Any home purchases over $1,000,000 are not affected as they do not qualified for insured mortgages.

As an example an insured mortgage home purchased for $600,000 will now require a down payment of $35,000 (previously $30,000).  A purchase of $750,000 would now require a down payment of $50,000 (previously $37,500).

This change is not expected to have a huge effect on our Cowichan Valley real estate market.  It is a much better outcome than the rumoured 7-10% flat down payment on homes $500,000 to $1,000,000 that was expected.

So while this may not affect all our clients, we like to keep you in the know.