July 17, 2018

Comparing New Amortization And Down Payment Rules

Government mortgage restrictions instituted from 2008-2011 have not achieved their goal, suggests Desjardins’ Senior Economist Benoit Durocher.  “The third series of government mortgage rules was announced nearly a year ago and we must conclude that the tightening introduced to date has not slowed the market enough.  Under these conditions, it is likely that the federal government will shortly announce a fourth series of measures to further limit mortgage credit.”  “Among other things, the government could be tempted to once again raise the minimum down payment (it went from 0% to 5% in October 2008).”  

Many believe another option being discussed may be a reduction in the amortization period from 30 years to 25 years along with raising the minimum down payment from 5% to 7.5% or even 10%.  In terms of the amortization period being reduced to 25 years, this would lower a typical family’s maximum purchase price by roughly 9%.  

Fortunately, most people don’t need a 30 year amortization to buy a home despite 41% of homebuyers choosing extended amortizations, the majority could have qualified with a standard 25 year mortgage.



Colleen Saunders is a 20 year veteran in the mortgage industry, serving Mississauga, Burlington, Oakville and Toronto and offering all mortgage related services such as 2nd mortgages, private mortgages and more.

To contact Colleen, please fill out the form on our site or call 416-459-2406


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