Let’s delve into the essential concept of down payments and their critical role in making your homeownership dreams come true.
A down payment is the initial money you contribute towards the purchase price of your dream home. It’s a fundamental part of the home buying process and demonstrates your financial commitment to your new abode.
Your down payment serves several purposes:
Equity Building: A larger down payment means you’re starting your homeownership journey with more equity in your property. This can be advantageous if you ever want to refinance or access home equity lines of credit.
Smaller Mortgage: The more you put down, the less you need to borrow, leading to a smaller mortgage. This can translate to lower monthly payments.
Mortgage Insurance: If your down payment is less than 20% of the purchase price, you’ll need mortgage default insurance (aka CMHC insurance). This safeguards the lender in case you’re unable to make payments.
How Much Do You Need?
The minimum down payment varies depending on the property’s purchase price:
– For homes up to $500,000: Minimum 5% down payment
– For homes between $500,000 and $999,999: 5% on the first $500,000 and 10% on the remaining amount
– For homes above $1 million: A minimum 20% down payment
You will also need to provide proof that the money has been in your Canadian account for 90 days for down payments that are less than 20%. For down payments that are 20%+, you only need to show 30 days history.
Are you ready to take the exciting step towards homeownership? Let’s chat about down payments, your financial goals, and how to secure the best mortgage deal for your unique situation. Reach out to me today for personalized guidance!