The amount of money you pay up front to obtain a mortgage. The minimum down payment in Canada is 5%. For down payments of less than 20%, home buyers are required to purchase mortgage default insurance, commonly referred to as CMHC insurance.
What is the minimum down payment required in Canada?
The minimum down payment in Canada depends on the purchase price of the home:
* If the purchase price is less than $500,000, the minimum down payment is 5%.
* If the purchase price is between $500,000 and $999,999, the minimum down payment is 5% of the first $500,000, and 10% of any amount over $500,000.
* If the purchase price is $1,000,000 or more, the minimum down payment is 20%.
The size of your down payment influences three things
The amount you put down at the beginning of your mortgage shapes three important outputs over the life of the mortgage:
* The home price you can afford
* The size of your mortgage and monthly payment
* The amount of CMHC insurance you pay
”Mortgage down payment sources”
There are a number of ways you can source funds for a mortgage down payment. Traditional sources include saving a fixed amount from every paycheque, selling stocks, bonds or personal property, or reaching out to immediate family, for example. Another great option is the RRSP Home Buyers' Plan (HBP) which lets first-time homebuyers withdraw up to $25,000 from Registered Retirement Savings Plans (RRSPs) for a home purchase, tax-free. Many first-time homebuyers take advantage of this opportunity and set up RRSP accounts well in advance, with the intention to reap the rewards when it is time to purchase real estate.
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