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Ask The Realtor: 5% Down payments

A recent announcement from the Finance Minister of Canada stating that the minimum down payment has been increased from 5% to 10% as of February 15, 2016 has been misunderstood by many members of the public. The truth is 5% is still an acceptable down payment for most residential home purchase valued under $500,000. The difference is that for any purchase over $500,000 and less than $1,000,000 only the amount ABOVE the $500,000 must have 10% down payment.


The difference is actually minimal as show in the following example:


Purchase price: $600,000.


Previous down payment amount: 5% = $30,000

New down payment amount: 5% of $500,000 ($25,000) + 10% of $100,000 ($10,000) = $35,000

Difference: $35,000 - $30,000 = $5,000



As shown by this example the difference in minimum down payment amount has changed relatively little. This being said, it still is a new rule which may effect some purchasers. 

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