CMHC Raises Down-payment required for Insured Mortgages and the New Land Transfer Tax will not be coming to Ottawa

land transfer tax changesAll of the talk in the real estate circles over the past few weeks has been about the New Land Transfer Tax that was coming to Ottawa, which would essentially double the current Land Transfer that buyers' pay every time they purchase a house.

That means that when you buy a home, you would need to pay an extra $4500 for this new Tax (for the average home). Currently this Tax is in place in Toronto and let's hope they keep it there, and don't come grabbing more money from homebuyers in Ottawa.

CMHC has also recently made some changes to the amount of down-payment that they require when a buyer requires a CMHC Insured Mortgage

New CMHC minimum down-payments

CMHC have just announced the new rules for the minimum down-payments required, and it's not such bad news, especially for the Firt Time Homebuyer.

With the average price of a home in Ottawa still under $400,000, there will be no change to the minimum down-payment required to buy a house in this price range, in fact there will be no change to buying a home up to $500,000, with the minimum remaining at 5%.

The biggest change is in the $500,000 to $1 Million range, where the portion up to $500,000 remains the same, but the portion from $500,000 up to $1 Million changes from 5% to 10%.

As an example:

Buying a home priced at $750,000 before these changes, would cost the buyer $37,500 as a minimum down-payment.

Under the new rules, a buyer would need to put down $50,000 as their minimum down-payment.

(First $500,000 X 5% = $25,000) + ($250,000 X 10% = $25,000) 

  • 5% minimum on homes up to $500,000, so no changes here.
  • 10% minimum on portion above $500,000, which was previously 5%
  • 20% minimum on homes of $1,000,000 and above, no change here either.