Down payment to buy a home

A down payment is often what buyers think is the total of all costs when buying a home. This is a very common misconception. The down payment for a home will vary depending on the buyer’s qualifications and price range. Save as much as you can for your down payment. The bigger the down payment, the smaller the mortgage, which can save you thousands of dollars in interest charges.

Saving the down payment to buy a home can seem overwhelming. First-time home buyers and those who’ve gone through the process before can experience the same anxiety. But it doesn’t have to be that way.

Sometimes saving for a down payment is as simple as making small changes to your budget or exploring other financing options. Both could help you save more money and reduce the amount of mortgage you need.

The amount of your down payment influences the property you can afford, the type of mortgage you get and whether you need to purchase mortgage default insurance.

Depending on your goal, you may consider ways to save more for your down payment or find alternate funding options. Find out how much you can afford to spend on your mortgage with our mortgage affordability calculator.

Minimum down payment requirements:

$500,000 or less requires a deposit of 5% of the purchase price.

$500,000 to $999,999 requires a deposit of 5% on the first $500,000 and 10% for the portion of the purchase price above $500,000

$1 million or more requires a deposit of 20% of the purchase price.

Here are a few ways you can save for a down payment:

1. Savings. Buyers often save regularly for years by reducing expenses, taking a second job, or getting a smaller apartment if they are renting. Make your plan and start as soon as possible!
2. Gift. If you would accept a gift, you’ll need to get it clearly in writing that the person making the gift has no financial interest in or obligation toward the property. A bank will not accept it if your gift is really a loan.
3. Special programs*. Provincial and local governments offer down payment assistance to homebuyers. Many nonprofit organizations also offer down payment assistance. 

*source: www.canada.ca