How many times have I been asked, "What is the minimum down payment that I require to purchase some real estate and where can these funds come from?"
Well it's a great question and the days of purchasing real estate without a down payment whatsoever, are long gone. Having said that, you require a minimum down payment of 5% of the purchase price up to $500,000.00 and then that increases to 10% up to $999,999.00. Now you'll pay a premium on any down payment of less than 20% and those premiums can be as high as 4% for a 25 year amortization. So it's really in your best interest to have a larger down payment to reduce the cost of any additional mortgage insurance.
Down Payment Requirements: Traditional sources of down payment funds include: 1)Cash 2)Savings 3)RRSP's 4)Funds borrowed against proven assets 5)Proceeds of sale from another property 6)Non-repayable gift from an immediate relative
Non-Traditional sources of down payment funds include: 1)Borrowed funds 2)Gifts 3)100% sweat equity 4)Lender cash back incentives
As a First Time Home Buyer you have the option of using your RRSP's to assist with your down payment. You are able to withdraw up to $25,000.00, you will be required to pay that back within 15 years. This equates to roughly $1,666.00 per year.
A great resource for many things including down payments, can be found on the CMHC website. You can find them at www.cmhc-schl.gc.ca/ or contact me anytime, I'd be happy to answer any questions that you may have.
As always, I encourage you to contact me if you have any questions with your current mortgage or are looking for one. Please find me on facebook at Jason Nesseth l Mortgage Specialist l British Columbia and on twitter @jasonmortgages.
"Working with you for the life of your mortgage!"
If you have any questions or comments about this blog, please feel free to call me at 604.375.7375, email jason.n@mortgagegroup.com or visit my website at jasonnesseth.com