Down Payments
In Canada we are required to have a minimum of 5% down on owner/occupied homes and 20% down on rental/investment properties — Don’t worry, i’m here to help!
Quick Answer...
In Canada, the down payment required for a mortgage depends on several factors, including the purchase price of the home and the type of mortgage you're applying for.
PRO TIP: You do not need to be a first-time homebuyer to use 5% down payment. This is a common misconception. You can have owned multiple properties in the past and the minimum down payment will still be 5% on your principle residence and/or second/vacation home.
Here are the general guidelines for down payments on mortgages in Canada:
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Minimum Down Payment: The minimum down payment required in Canada varies based on the purchase price of the home.
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For homes with a purchase price of up to $500,000, the minimum down payment is 5% of the purchase price.
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For homes with a purchase price between $500,000 and $999,999, the minimum down payment is 5% of the first $500,000, and 10% of the portion exceeding $500,000.
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For homes with a purchase price of $1 million or more, the minimum down payment is 20%.
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Mortgage Insurance: If your down payment is less than 20% of the purchase price, you'll typically need to purchase mortgage insurance through the Canada Mortgage and Housing Corporation (CMHC) or other approved insurers. This insurance protects the lender in case you default on your mortgage.
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High-Ratio vs. Conventional Mortgage: A high-ratio mortgage is one where the down payment is less than 20%. A conventional mortgage is one where the down payment is 20% or more. Conventional mortgages do not require mortgage insurance.
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Self-Employed or Non-Traditional Income: If you're self-employed or have non-traditional sources of income, some lenders may require a larger down payment.
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Gifted Down Payments: In some cases, you may be able to use a gifted down payment from a family member to meet the minimum down payment requirement.
Please note that mortgage regulations and requirements may change over time, so it's essential to check with your broker (me!) to get the most up-to-date information and to understand your specific situation.