In real estate, a down payment is the amount of money you contribute towards the price of a home. If you have $100,00 and want to buy a $750,000 condo, your $100,000 is the down payment, and you’ll need a mortgage for $650,000.
Related: All About Mortgages Down payments can come from:
Don’t forget that when buying a home, you’ll also need to budget for closing costs, so your down payment is rarely equal to the amount of money you have saved.
The amount of the down payment you need to pay depends on the price of the property you buy.
In most situations, you’ll need a minimum of 5% down for properties under $500,000; 5% on the first $500,000 and 10% on the amount between $500,000-1 million for properties priced between 500K-1 Million, and 20% down for properties priced over $1 million.
In Ontario, you’ll need a minimum down payment of 5% of the purchase price for a home under $500,000. That means you can borrow up to 95% of the price of the home (assuming you qualify for a mortgage based on your income, credit score, assets and
liabilities). Example: $475,000 condo – down payment required: $23,750
When your down payment is less than 20%, you have to purchase mortgage default insurance (through CMHC, Genworth Financial or other companies). The premium of the insurance is calculated as a percentage of the mortgage and depends on the amount of your down payment. Click here to calculate CMCH loan insurance.
If the home costs more than $500,000 but less than a million dollars, you’ll need a minimum of 5% down on the first $500,000 and 10% on the remainder. You’ll also need to buy mortgage default insurance. Example: $750,000 condo – down payment required = ($500,000 * 0.05) + (250,000 * 0.10) = $50,000