Buying in 2016

Recently, the government announced some changes that will increase the minimum down payment on insured mortgages. At first glance, these changes may seem drastic, but in actuality they are not as severe as they could have been.

Currently, there is a 5% minimum down payment of the total purchase price, up to $1,000,000.

With these new changes, the minimum down payment is 5% for the first $500,000 of the purchase price, and then 10% payment for the remaining value above $500,000.

For example:

A $600,000 purchase will require a down payment of $35,000 rather than the current standard 5% of $30,000.

For the first $500,000, the down payment is 5%, which would equal $25,000.
In addition, the remaining $100,000 would require a 10% payment, equaling $10,000, for a total down payment of $35,000.

With these new changes, some higher valued homes will require a larger down payment. However, this is much less than a standard down payment of 10% on the total payment price, which would be a much more severe change.

If you are looking to buy and want to take advantage of the current regulations, then the following dates are very important:

A buyer must have an accepted offer and a mortgage commitment from a lender approved by February 15, 2016. The Sale must then be completed by July 1, 2016.

This means there is substantial time to close in 2016, but offers need to be accepted by mid February. To take advantage of the current regulations, buyers need to be actively looking for homes in January and early February.

These dates and how they are implemented are one of the most important aspects for those looking to buy in the new year. I am happy to answer all questions on this topic – please contact me with any questions or comments!