Where Can I Find a Down Payment?
Thinking of buying a home but not sure where to start when it comes to finding a down payment? The minimum down payment in Canada is 5% of the home purchase price with the average range for most down payments being 5 to 20%. As of July 9th, 2012, all homes over $1 million dollars will require a 20% down payment. With this in mind, remember, the more you put into your down payment the less your overall mortgage payments will be.
There are different sources that you can look at to help you fund a down payment.
Traditional sources include:
- Setting aside a fixed amount each month from your pay cheque
- Selling stocks, bonds, property and other investments
- Receiving help from immediate family
Non-traditional sources include:
- Borrowing funds
- Gifts from non-family members
An option for the first time home buyer is the RRSP Home Buyers’ Plan (HBP). This program allows a person the opportunity to withdraw up to $25,000 from their Registered Retirement Savings Plan (RRSPs) tax free. Many people realize the potential of this program and set up an RRSP account in advance. That way when the time comes to purchase a home they have this resource available to them. Remember though, this withdrawal is considered a loan and needs to be repaid within 15 years.
Each of these options has their own unique benefits and we will gladly sit down with you to discuss which might be the best for you.