Understanding Your Down Payment Options

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%.

Mortgage default insurance, commonly referred to as CMHC insurance, protects
the lender in the event the borrower defaults on the mortgage. It is required on all
mortgages with down payments of less than 20%, which are known as high-ratio
mortgages. A conventional mortgage, on the other hand, is one where the down
payment is 20% or higher.
Your downpayment may come from several sources but be prepared to provide
proof and documents for those sources for the last 90 days. Here are some
options for your downpayment:
 Savings / Chequing / TFSA / Stocks / Bonds
o 90 day statements are required for these sources of downpayment, if
possible avoid transferring money around until after your lender
approves the downpayment

 Property Sold
o Completed Sold Contract and current mortgage statement or
Statement of Disbursements from lawyer required as proof of sale
proceeds
 Gifted Downpayment
o Must be from IMMEDIATE family member (lenders will not accept
gifted funds from friends or other family members who aren’t
considered immediate)

 RRSP
o Under the federal government's Home Buyer's Plan, first-time home
buyers are eligible to use up to $35,000 in RRSP savings per person
($70,000 for couples) for a down payment on a home. The withdrawal
is not taxable as long as you repay it within a 15-year period. To
qualify, the RRSP funds you plan to use must have been in your
RRSP for at least 90 days
 First-Time Home Buyer Incentive
o First-time home buyers may be eligible for a shared equity mortgage
with the Government of Canada. You need to repay the incentive
after 25 years, or when you sell the property. You can also repay it at
any time without a prepayment penalty. Contact your Mortgage
Broker to see if you qualify for this incentive and if it’s right for you

 Borrowed Downpayment
o Some lenders will accept this form of downpayment, however there
are only a few that will allow it, but be aware that the mortgage rate
and default insurance premiums will be higher and qualifying in
general will be more difficult. Be sure to discuss your options and
possible solutions / challenges with your mortgage broker prior to
starting your house shopping so that you are prepared and avoid
disappointment.

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