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Down Payment

How Much Money do You Need to Make a Down Payment?

You can buy a house for as little as 5% down, but you must keep in mind that the larger the down payment, the easier it will be to stay on top of those other expenses. It is a good idea to calculate what you can afford and what would work best for you. After you are comfortable with what you can afford and you are ready to place an offer on a selected property, you will need part of your down payment as a deposit. Remember to keep some of that down payment easily accessible.

Does the Size of Your Down Payment make a difference?

If your down payment is 25% or more, of the lending value, you may qualify for a conventional mortgage. If your down payment is less than 25% of the lending value, the mortgage must be insured that premium will be added to the mortgage amount and is paid by the borrower. The insurance protects the lender against borrower default. Your lender will arrange for mortgage default insurance.

How Can You Save Enough Money for a Down Payment?

Saving enough money to buy a home might seem overwhelming, but using a savings or investment plan may help you get that down payment faster.

Personal Bank (savings) Accounts - Try opening a bank account and set aside money specifically for your new home. Make putting money, on a regular basis, into this account, as you would pay your monthly bills. Again, keep in mind that you will need cash (or a certified cheque) for the down payment as well as associated closing costs of that home.
Investments - As the money in your bank account grows, or if you already have money set aside, you may want to invest.
Using RRSPs towards your Down Payment - RRSP’S are a stable way of securing your financial future while enjoying tax benefits today. You may also be able to use your RRSP savings towards the purchase of a home. Currently the Home Buyers’ Plan permits the first-time homebuyer to withdraw up to $20,000 from their RRSP to buy or build a home. The amount withdrawn is deemed a loan and must be repaid within a 15-year period, which takes effect the third year after the withdrawal.

For more information on using your RRSP’s, please visit www.genworth.ca.

5% Cash Back Mortgage

This type of mortgage is only available through a mortgage professional and not directly through a bank. Call me to discuss how this option may work for you and allow you to get into that new home.

Kerri Hospes
Professional Mortgage Planner

phone: 403.813.6397
fax: 403.291.2060
kerri@calmortgage.ca

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