The size of a down payment can vary. Depending on the type of mortgage, down payments generally range from 5% to 20% of the purchase price.
To obtain a conventional mortgage , home buyers are required to put down at least 20% of the purchase price or appraised value (whichever is less) as a down payment. If you don't have the necessary time or resources to save a full 20% down payment, you can choose a high-ratio mortgage and buy a home with a down payment of as little as 5% . This option is called a high-ratio mortgage and it requires you to purchase default insurance.
Whether you choose a conventional or a high-ratio mortgage, one thing is almost always certain: the larger your down payment, the more you save in the long run. A larger down payment --
- Reduces the amount of your monthly principal and interest payment
- Reduces the total amount of interest you pay over the life of your mortgage
Ask about the RSP Home Buyers' Plan
The RSP Home Buyers' Plan (HBP) lets a first-time buyer withdraw up to $20,000 from RSPs for a home purchase. The withdrawn amount must be repaid within 15 years, subject to a minimum annual repayment that is 1/15 of the amount withdrawn. If the full $20,000 is withdrawn, the minimum annual repayment is $1,333 . If less than the minimum is repaid in any particular year, the balance is added to the taxpayer's income.
Want more information? Check the Canada Customs and Revenue Agency Publication .
CMHC or GEMICO may insure a mortgage for up to 95% of the lending value of the house. Therefore, purchasers only need a 5% down payment. Eligible borrowers include anyone who buys a home in Canada intending to occupy it as their principal residence.
Purchasers can use up to 32% of their gross family income for payments of mortgage principal and interest, property taxes and heating. A buyer's total debt load (including consumer loans, etc.) cannot exceed 40% of the gross family income.
People who insure a mortgage loan with CMHC or GEMICO pay an application fee and a premium. The application fee ($75 - $235 ) covers the costs incurred by the insurer to review the application. The premium is based on the down payment and loan amount. Typical fees range from 1.00% to 3.25% of the principal amount of your mortgage.
| Cost: |
Premiums range from 1.00% to 3.25% of the mortgage loan amount and can be paid up front or added to the principal amount of the mortgage. |
| Loan Amount: |
Up to 95% of the lending value of the house. |
| Mortgage Term: |
To be set by the lending institution. |
| Max. House Price: |
Varies by market. |