As of December 15, 2024, new regulations have been introduced to make homeownership more accessible in Canada, including Calgary, Alberta. These changes specifically focus on adjusting the minimum down payment requirements based on the property’s purchase price. Whether you’re buying your first home or upgrading, understanding these new requirements is crucial for planning your next move. Here’s a detailed breakdown of the current down payment rules:
Minimum Down Payment Requirements:
• Homes Priced Up to $500,000:
For homes priced at $500,000 or less, the minimum down payment is 5% of the purchase price.
Example: If you’re purchasing a home for $500,000, your minimum down payment would be $25,000.
• Homes Priced Between $500,001 and $1,499,999:
For homes in this price range, the minimum down payment is calculated by taking 5% of the first $500,000 and then 10% of the remaining amount above $500,000.
Example: If you’re buying a $700,000 home:
5% of $500,000 = $25,000
10% of $200,000 = $20,000
Total Minimum Down Payment: $25,000 + $20,000 = $45,000
• Homes Priced at $1,500,000 or More:
For homes above $1.5 million, the minimum down payment is 20% of the purchase price.
Example: For a $1,500,000 home, the minimum down payment is $300,000.
Key Changes Effective December 15, 2024:
• Increased Price Cap for Insured Mortgages:
The maximum property value eligible for mortgage insurance has increased from $1 million to $1.5 million. This change means buyers can now make lower down payments on higher-priced homes, allowing more flexibility when purchasing homes that are priced closer to the $1.5 million mark.
• Extended Amortization Periods:
As of December 15, first-time homebuyers and purchasers of newly built homes can now opt for a longer mortgage amortization period of up to 30 years. This extension helps reduce monthly payments, making it easier for buyers to manage their finances while still investing in a new home.
Additional Considerations:
• Mortgage Loan Insurance:
If your down payment is less than 20%, mortgage loan insurance will be required. These premiums are added to your mortgage and vary based on the amount of your down payment. Be sure to factor this into your total mortgage costs when planning.
• First-Time Home Buyer Incentives:
If you're a first-time homebuyer, take advantage of programs like the enhanced Home Buyers’ Plan, which allows you to withdraw up to $60,000 from your RRSPs to help fund your down payment. This is a valuable tool for first-time buyers looking to minimize their initial costs.
Final Thoughts:
The updated minimum down payment requirements are designed to make homeownership more achievable, even as housing prices continue to rise. Whether you are a first-time buyer or looking to upgrade, understanding these changes is crucial for making informed decisions. These adjustments give buyers more flexibility, especially for those purchasing higher-priced homes.
For more detailed information and the latest updates, visit the Government of Canada’s Mortgage and Housing Information or consult with a mortgage professional to get personalized advice.
If you have any questions, don’t hesitate to reach out – I’m here to guide you every step of the way.