How much money do I need for a downpayment?
Principal residence- 5%, Investment/recreation property – 20%-35%
Starting with principal residences, if you are buying a home and planning on living in it, you can expect to have to put 5% down. A couple things to keep in mind for this- first. anything less than 20% down requires CMHC insurance (which is a few extra thousand dollars that will be added to your mortgage). The other thing to remember is that when you purchase home, you most likely included an initial deposit with your offer; these funds will be subtracting from the 5% down. (ie. Buy house for $100,000 with $2500 deposit…only need to pay $2500 later to equal the $5000 down payment)
There a few lenders out there right now that are still offering 0% down, but they can be hard to get and you will end up paying more for them. Usually they add that extra 5% right into the mortgage. On top of this the lenders will be very particular about the house they are lending on, so could deny lending based on the condition/appraisal of property.
When looking at investment or second properties, the gold standard used to be 20% down. Nowadays however this is becoming more and more rare, as lenders now are more often expecting 30-35% down. Again there are many stipulations. Although you wont need CMHC insurance on this type of product, you will most likely still need appraisals (at your own cost) to be completed. Additionally, most lenders have restrictions on the type and amount of properties you can own. It is best to talk with a mortgage broker about a potential purchase so you can know what to expect ahead of time.
