What to expect with the new down payment rules.

There is a lot of talk about the new rules regarding mortgages and down payment, so I thought I would explain it clearly so you know what to expect when buying your new house. The current rules are that if you are buying a house under $1,000,000 you can have a loan to value ratio of 95%, meaning that you only have to put 5% down payment into the purchase. As of Feb 15, 2016 the new rules will be that everything up to $500,000 is still at 5% minimum down payment and the portion above $500,000 will increase to 10% down payment. For example, on a purchase of $600,000, your total down payment would be $35,000 (5% for the $500,000 and 10% for the remaining $100,000 =$600,000). This will effect a smaller number of people than we are lead to believe as most 1st time buyers are purchasing under the $500,000 mark. In Calgary the median price is around the $450,000 range, meaning that the majority of homes sold are under the $500,000 mark anyway. As buyers get into the more of the luxury market, they tend to have more of a down payment built up and in a lot of cases, are putting more than 10% down anyways. What does this mean for you? Well, if you are among the few that are purchasing a house between $500,000-$1,000,000 and only putting down 5%, then you have until Feb 15, 2016 to avoid the increase. For more information call 403.921.5635, I always love talking about real estate!  

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