Real Estate Services in Ottawa and Surrounding Areas

Greater Savings with a Larger Down Payment


The size of a down payment varies. Down payments generally range from 5% to 20% of the purchase price, depending on the type of mortgage. 

 

To obtain a conventional mortgage, home buyers must put down at least 20% of the purchase price or appraised value (whichever is lower) as a down payment. For a $300,000 property, this totals $60,000.

 

If you do not have the time or resources required to save a full 20% down payment, you may instead opt for a high-ratio mortgage to purchase a home with a down payment of as little as 5%. For a $300,000 property, this totals $15,000. A high ratio mortgage requires you to purchase default insurance (mortgage insurance).

 

NOTE: New mortgage regulations implemented in early 2016 require more than 5% down when purchasing a property above $500,000. 

 

Regardless of which mortgage option you choose, one fact remains constant: the larger your down payment, the more money you save in the long term.

 

For more information, visit about the advantages of a larger down payment, visit the Canada Customs and Revenue Agency Publication.

A larger down payment...

  • Reduces your monthly principal and interest payment
  • Reduces the amount of interest you will pay over the life of your mortgage

Ask about the RRSP Home Buyers' Plan

 

The RRSP Home Buyers’ Plan (HBP) allows first-time home buyers to withdraw up to $25,000 from registered retirement savings plans (RRSPs) to purchase a qualifying home. The withdrawn amount must be repaid with in a 15-year window and is subject to a minimum annual repayment of 1/15 of the total amount withdrawn. If the full $25,000 is withdrawn, the minimum annual repayment is 1,333. If the buyer repays less than the minimum requirement, the balance is added to the taxpayer’s income.

Insuring Your High-Ratio Mortgage

Mortgage insurance providers such as CMHC or Genworth Financial may insure a mortgage for as much as 95% of the lending value of the house. Therefore, buyers do not require a large down payment. If you buy a home in Canada and intend to occupy it as your principal residence, you qualify as an eligible borrower. NOTE: government-backed mortgage insurance is restricted to homes with a value below $1 million.

 

Buyers can use up to 39% of the gross family income toward mortgage principal and interest payments, property taxes, and heating. A purchaser’s total debt load (including consumer loads) cannot exceed 44% of the gross family income.

 

Insuring a mortgage loan with an institution such as CMHC or Genworth requires a premium. The premium is calculated based on the down payment and loan amount. A list of the mortgage insurance premiums can be found here.

 

Cost:
Premiums can be paid up front or can be bundled with the principal amount of the mortgage.

 

Loan Amount
Up to 95% of the lending value of the home.

 

Mortgage Term:
To be set by the lending institution.

 

Max. House Price:
Varies by market.

 

For more information about down payments, mortgage insurance, conventional mortgages, and high-ratio mortgages, visit the Canada Mortgage and Housing Corporation or Genworth Financial websites.