A downpayment is an initial payment made when something is bought on credit. It is also a topic that many people inquire about when buying real estate.
The minimum downpayment in Canada depends on the purchase price. This was recently changed in the last few years.
Let’s break it down to make it less confusing.
Under $500,000 Purchase Price
If the purchase price is $500,000 or below, then the minimum down payment is 5%.
$500,000 to $1,000,000 Purchase Price
If the purchase price is between $500,000 to a million, then the first $500,000 has to be 5% and the remaining balance would require 10% down payment.
$1,000,000+ Purchase Price
For properties with a purchase price of over a million dollars, the downpayment must be 20%.
To better understand it all, let us paint a picture with an example of a purchase price of $800,000.
Purchase Price: $800,000
First $500,000 subject to 5% = $25,000
The remaining amount ($800,000 - $500,000 = $300,000) subject to 10% = $30,000
Total Minimum Down Payment = $55,000
**Note this mortgage would be subject to Mortgage Insurance**
This is just one example and I always recommend to speak with a mortgage lender to see all your financial options and see what works best for you.
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