New Lower Minimum Down Payment Required
New legislation that lowers the required down payment for mortgages was passed, yesterday. The federal government has lowered the minimum down payment requirement for mortgage default insurance from 25% to 20%.
Under the previous existing Bank Act regulations, which have been in place for 40 years, a bank could not provide a mortgage loan for more than 75% of the value of the property, without having the customer purchase mortgage insurance. Bill C-37 raises the loan-to-value ratio requiring mortgage insurance from 75% to 80%.
In other words, buyers can now put down at least 20% of the cost of a home and they won't have to buy mortgage insurance.