Minimum Down Payment by Home Purchase Price: Existing and New Eligibility Rules
Recent Actions by Minister of Finance Aimed at Responsible Homeownership
Other
TORONTO, Dec. 11, 2015 /CNW/ – The Minister of Finance announced today a change to the eligibility rules for new government-backed insured mortgages on properties priced above $500,000. Effective February 15, 2016, the minimum down payment for new insured mortgages will be increased from 5 per cent to 10 per cent for the portion of the house price above $500,000.
“Today’s announcement by the Minister of Finance shows that maintaining a healthy and stable housing market is important for the new Government,” said Stuart Levings, President and CEO of Genworth Canada. “As a key stakeholder in the housing finance system, we acknowledge the vital role Government plays in this market and remain committed to helping first-time homebuyers achieve homeownership responsibly.”
For borrowers who purchased properties above $500,000 in 2015, we estimate that 9 per cent of our total transactional new insurance written could have been impacted, of which three quarters comprised homes below $700,000. Considering this, we expect that most borrowers impacted by the new rules would be able to afford the increase in down payment, while some might choose to purchase a lower priced home.
As illustrated by the Department of Finance, and outlined in the table below, the minimum down payment will increase only gradually with the price of a house, varying from 5 per cent for homes priced at or below $500,000 to 7.5 per cent just below $1 million. A borrower buying a $600,000 home would therefore see their minimum down payment requirement increase by $5,000.
Minimum Down Payment by Home Purchase Price: Existing and New Eligibility Rules
|
Home Purchase Price |
Existing Eligibility Rules |
Eligibility Rules Effective February 15, 2016 |
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|
Minimum Down Payment Percentage |
Minimum Down Payment Amount |
Minimum Down Payment Percentage |
Minimum Down Payment Amount |
|||
|
$500,000 and below |
5.0 % |
up to $25,000 |
5.0 % |
up to $25,000 |
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|
$600,000 |
5.0 % |
$30,000 |
5.8 % |
$35,000 |
||
|
$700,000 |
5.0 % |
$35,000 |
6.4 % |
$45,000 |
||
|
$800,000 |
5.0 % |
$40,000 |
6.9 % |
$55,000 |
||
|
$900,000 |
5.0 % |
$45,000 |
7.2 % |
$65,000 |
||
|
$999,999 |
5.0 % |
$50,000 |
7.5 % |
$75,000 |
||
|
Source: Department of Finance |
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Genworth Canada will be working with its customer base to assist in a smooth transition to the new rules.
About Genworth Canada Genworth MI Canada Inc. (TSX: MIC) through its subsidiary, Genworth Financial Mortgage Insurance Company Canada (Genworth Canada), is the largest private residential mortgage insurer in Canada. The Company provides mortgage default insurance to Canadian residential mortgage lenders, making homeownership more accessible to first-time homebuyers. Genworth Canada differentiates itself through customer service excellence, innovative processing technology, and a robust risk management framework. For more than two decades, Genworth Canada has supported the housing market by providing thought leadership and a focus on the safety and soundness of the mortgage finance system. As at September 30, 2015, Genworth Canada, had $6.1 billion total assets and $3.4 billion shareholders’ equity. Find out more at www.genworth.ca.
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SOURCE Genworth MI Canada
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