As of February 15, 2016, the Government of Canada has increased
the minimum down payment required for higher-priced homes across
the country.
For those consumers that were unable or unwilling to produce the
mandatory 20% down payment for home purchases, Canada Mortgage and
Housing Corporation ("CMHC"), provided mortgage loan
insurance so that the lender was protected against loss if the
borrower defaulted. CMHC historically required a minimum down
payment of 5% to qualify for its insurance program.
Due to concerns over affordability, financial stability, and a
potentially overheated housing market, CMHC will now require a 10%
down payment on the portion of the mortgage it insures that is over
$500,000. The 5% minimum will remain for the portion of the
mortgage up to $500,000. Note that by law all properties over
$1,000,000 require a minimum down payment of 20%, and therefore the
CMHC rules do not apply to such purchases.
