How the new 10% minimum down payment works

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We crunched the numbers to figure out the new graduated system for homes over $500,000

In the market to buy a home in 2016? You may need raid the piggy bank. As of Feb. 15, 2016, there will be changes to the rules for government-backed mortgages.

Buyers in the market for homes worth less than $500,000, will still only need 5% down but any purchase over $500,000 will require a graduated 10% minimum down payment. That means for every dollar a house costs over $500,000, a buyer will need 10% to cover the down payment. For instance:

House Price 2015 Minimum Down Payment Required 2016 Minimum Down Payment Required
$500,000 5% = $25,000 5% = $25,000
$800,000 5% = $40,000 5% on first $500,000 = $25,000 + 10% on next $300,000 = $30,000, for a total DP of $55,000

“This change is just one more step to try and cool the more active housing markets in Toronto and Vancouver,” says Alyssa Furtado, CEO of, “and the people most impacted will be first-time home buyers.”

Starting in February, buyers will need approximately $6,635 more cash in hand (for a total of $38,268.50) to buy an average priced home in Toronto (as of Nov. 2015, the average price for all Toronto home types—single family and condos—was $632,685).

In metro Vancouver, where the home price benchmark was up by 17.8% as of November 2015, buyers will need to save an additional $12,625—for a total down payment of $50,250 (on the benchmark price of $752,500).

5 things to know about the new mortgage rules »

As a result buyers in higher-priced markets will have three options, says Furtado:

→  delay buying to save more

→ purchase a cheaper home

→ try and get secondary funding (either through the bank of mom and dad, or through higher-interest financing)

“There’s been a number of moves, over the last few years, in an attempt to regulate Canada’s housing market,” says Furtado. “CMHC has already increased its mortgage default insurance premiums twice in 24 months; they’ve increased the down payment on homes worth $1 million or more to 20% and they increased the down payment made on rentals to 20%—and none of these changes have really cooled Canada’s two hot housing markets. Today’s announcement was a much less severe change, so it’s doubtful it will have a huge impact.”

The Department of Finance released this chart that illustrates how the new minimum down payment breaks out:

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