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CALCULATE DOWN PAYMENT
How to calculate a minimum down payment
Based on the three categories, here is how you can do the math:
1. For homes priced $500,000 or less:
You need to take your purchase price and multiple it by 5% to get your down payment.
2. Ex. on a $500,000 home: $500,000 x 5% = $25,000
3. For homes priced between $500,000 and $999,999: You will need to add two amounts.
The first is 5% of $500,000. The second amount if 10% of the remaining price of the home.
4. Ex. on a $750,000 home:
i, $500,000 x 5% = $25,000
ii, $250,000 x 10% = $25,000
iii, $25,000 + $25,000 = $50,000
5 For homes priced $1 million and above, you need to multiply by 20%
6 Ex. on a $1,000,000 home:
i $1,000,000 x 20% = $200,000
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PAYMENT AFFECTS
How a down payment affects the total cost of your mortgage
While you're only required to make one of the minimum down payments we outlined above, you might decide to make a larger down payment. Why? Making a larger down payment can help you:
1. Qualify to buy a more expensive home
2. Reduce the amount you pay each month
3. Reduce the interest you pay over the life of your loan
4. Save yourself the cost of CMHC insurance
(can range from 1.70% to 3.10% of your mortgage payments)
You should know: When you buy a home, you'll also have to budget for things like property taxes, land transfer taxes and closing costs.
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NOTE
If your down payment is less than 20% of the purchase price, you will need to buy mortgage default insurance.
Mortgage default insurance applies to homes under $1 million, so you're required to put 20% down. Another reason why it's important to start saving for a down payment for your new home
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