Making sense of the new mortgage rules

There has been a lot of confusion on the new mortgage rules with clients thinking they will need more than 20% down. Here is some Clarification on what Down Payment is needed for different Circumstances.

5% Down Payment

Can be used for:

  1. First Time Home Buyers
  2. New to Canada Clients with 2 Credit Sources for previous 12 months OR a Strong Credit File (Can be Gifted)
  3. Vacation Home – 4 Season Home with Year round access (Type A Property)
  4. Second Home – Owner Occupied or for an immediate family member (Child, Parent)
  5. Purchase Plus Improvements – if Owner Occupied
  6. Construction Builds – Progress Advances

10% Down Payment

Can be used for:

  1. Stated Income Clients with 2 Years History of Self Employment
  2. New to Canada Clients with Less than 1 Year History with 6 Months Bank Statements (5% of the Down Payment must be own Funds)
  3. Vacation Home – 3 Season (Type B Property)

20% Down Payment

Can be used for:

  1. Conventional Mortgages with NO Lender Insurance Premiums
  2. Rental Properties
  3. Self Employed Clients with Less than 2 Year History
  4. Stated Income Clients with less than 2 Year History
  5. Clients that do not meet the Minimum Equifax Beacon Requirements

Special Conditions:

  1. Foreign Funds need to be sitting in a Canadian Bank Account Varying from – Proof of Deposit to 90 days (Depending on the Lender)
  2. Funds are not accepted from all Countries due to Sanctions
  3. Some Lenders still allow Borrowed Down Payments (Flex Down)
  4. Gifted Funds from Immediate Family Members are Allowed

Lenders all have Different Rules when it comes to what they will accept for Down Payments. If you are having a hard time deciding to use a mortgage broker or a bank talk to your realtor!

Infomation kindly provided by Eva Neufeld from the Mortgage Tailers.