New Mortgage Rules for Homes Over $500,000 Go into Effect

Canadians looking to buy homes between $500,000 and $1 million will have to put down larger down payments as new federal rules recently took effect.

Under the changes, homebuyers must now put at least 10% down on the portion of a home that costs more than $500,000. Buyers can still put down 5% on the first $500,000 of a home purchase. Homes that cost more than $1 million still require a 20% down payment.

With the average local home price being below $500,000, the effect will be smaller In Southern and Central Alberta than in other major centres, such as Vancouver or Toronto.

Ottawa tightened rules for new insurable loans four times between 2008 and 2012, including upping the minimum down payment to 5% and reducing the maximum amortization period to 25 years from 30.

Please contact me for any questions you may have on the new rule, or for home financing in general.