Megan Carey

Making a down payment is one of the biggest decisions youll face when purchasing a home. Naturally, you may have a few questions about how the process works, such as: Whats the minimum amount you can put down? How will it affect your mortgage? And where can you get the money? Fortunately, we have all the answers to your down payment questions. What is a down payment? Simply put, a down payment is the amount of money you put towards the purchase of your home. This amount is then deducted from the total price of the home, with the remainder to be covered over the course of your mortgage. Whats the minimum amount that you can put down? In Ontario, the minimum down payment you can make on a house under $500,000 is 5%. For houses more than $500,000 but less than $1,000,000, the 5% minimum down payment applies to the first $500,000, while 10% is applied to the remainder. For example, if your home costs $700,000, your down payment for the first $500,000 would be 5% ($25,000), and 10% for the remaining $200,000 ($20,000) For houses over $1,000,000, the minimum down payment is 20%. What is mortgage loan insurance? Mortgage loan insurance (or default insurance) is designed to protect the lender in the event that youre unable to meet your mortgage payments. It is mandatory for those with a down payment lower than 20% to obtain mortgage insurance, though you may be required to do so under certain programs even if you have a 20% down payment. How does your down payment affect your mortgage? The higher your down payment, the lower your monthly mortgage payments. Likewise, higher down payments mean lower mortgage loan insurance rates, with premiums ranging from 0.6% to 4.5% the amount of your mortgage. With less than 20% down, you can only amortize your mortgage over 25 years. With more than 20% down you may qualify to up to 30 year amortization. Can you borrow the money for your down payment? Provided that you meet the lenders minimum requirements, in many cases you will be allowed to borrow some of the money for your down payment. There are a number of ways to go about doing this. The first is to take out a line of credit, a type of loan that allows you to borrow money up to a certain limit. Another, less common, option is to use a personal loan. However, doing so may affect your qualifying ratios. Can I use funds from family as my down payment? You can also use gifted funds from immediate family members for a down payment. These funds must be gifted without a re-payment plan. If youre looking to buy a new home or property and want to learn more about the process, including your down payment options, contact Personal Choice Mortgage Services and schedule a free consultation with a knowledgeable and experienced mortgage broker who can answer all your questions and help steer you in the right direction. EMAIL: info@pcmortgages.com PHONE: 905-318-1414 TOLL FREE: 1-877-318-4141 By: Graeme Carey

From CMHC Key highlights from the 2023 release We expect house prices and supply in Canada to decrease between 2022 2023. Price declines are expected to end sometime in 2023 before increasing for the remainder of the forecast period. Our analysis forecasts a significant drop in housing starts in 2023 and we can see some recovery starting in 2023 to 2024 and onward. Rental affordability is also set to decline due to demand outstripping supply, especially in Vancouver and Toronto. Prairie provinces expect more positive housing market conditions due to interprovincial migration and affordable homeownership. Ontario, British Columbia and Qubec will see significant drops in housing starts compared to other regions. The Atlantic regions economy remains stable and moderate relative to other regions. https://assets.cmhc-schl.gc.ca/sites/cmhc/professional/housing-markets-data-and-research/market-reports/housing-market-outlook/2023/housing-market-outlook-spring-2023-en.pdf?rev=5c29bc91-2310-435f-b2c9-b801866d0ede