Your Down Payment Details
How much can I put down and where can it come from
One of the most common questions we get is, how much do I have to put down to buy a house?
The long and short of it, you need 5% down to purchase a house. Even if you have purchased a home before, you can still purchase your next with 5% down. That being said, with any mortgage, if you put down less than 25% of the purchase price, you will incur CMHC fees, AKA mortgage default insurance fees. Your premium will be a set amount based on how much you are putting down. Mortgage default insurance is required by banks so they have the assurance that they need to cover for any losses in the rare case of a foreclosure. The fee is added into the total amount of your mortgage, you do not have to worry about coming up with extra cash out of pocket.
The fees are structured as follows:
Up to and including 95% - 4.00%
Up to and including 90% - 3.10%
Up to and including 85% - 2.80%
Up to and including 80% - 2.40%
CMHC fees will be a one time cost, as long as you do not sell the home or refinance and pay the mortgage out in full. The mortgage can be ported to a new property if you move, which will keep the policy intact. You are able to add additional funds to the mortgage at this time upon qualification.
The down payment can come from a wide variety of sources. Heads up, the full amount of your down payment needs to be verified. If you are planning to purchase in the next few months you should get a pre-approval in place so we can verify that your down payment is a-ok!
Acceptable down payment sources are:
Sale of your home or an asset.
TFSA, Savings, Chequing accounts.
RSP's - tax free for first time home buyers.
Home Equity Line of Credit.
Gift from an immediate family member.
In some cases - borrowed down payment is possible.
Any deposit over $500 must be verified. If you have some cash under your mattress you need to get it into a bank ASAP; funds used for a deposit must have sat in your bank for 90 days to be accepted.
Call and one of our awesome Regional Mortgage Group Brokers will be happy to help you with your next mortgage!