This is a great question and I get asked it all the time. Saving for your own down payment to buy a home can seem overwhelming. First-time homebuyers and even those who’ve gone through the process before can experience a ton of anxiety.
It does not have to be this way and it can be simple and easy. Just by making a few small changes to your budget or exploring a few financing options can allow you to save enough for your dream home.
Nothing is as central as your down payment; the property you can afford, the type of mortgage and your potential mortgage insurance is all affected by your down payment.
Minimum down payment requirements:
- For homes that cost up to $500,000, the minimum down payment is 5%
- For homes that cost more than $500,000 and less than $1 million, the minimum down payment is 5% of the first $500,000 plus 10% of the remaining balance
- For homes that cost $1 million or more, the minimum down payment is 20%
- Down payment amounts
|First $500,000 x 5%||$22,500||$25,000||N/A|
|More than $500,000 and less than $1,000,000 x 10%||N/A||$35,000||N/A|
|More than $1,000,000 x 20%||N/A||N/A||$300,000|
|Total down payment||$22,500||$60,000||$300,000|
You may want to start saving soon to make sure you have enough for that down payment
Lots of people say that 20% down is the best option, however, sometimes paying 20% down for your home may not be the best thing for you. Often providing 20% down will give you a higher rate than say 18%.
It is all about the risk for the lender and with a down payment of less than 20% the rate becomes insurable and thus less risky for the lender. Here is the thing… this isn’t always the case and sometimes a different approach is needed.
For more information feel free to contact me. I can give you a few tips and some help for you to save. I am happy to help find your simple mortgage solution. Call me anytime at 604-202-9913 OR email at [email protected]