Down Payments 101: Tips & Resources
- Home Buying Tips
- Friday, January 5, 2018
If you’ve started to save up for your down payment but need some help navigating this exciting journey, we’ve got some great resources for you!
First Time Home Buyer Advantage
If you are a first-time home buyer, you have the option to only pay 5% of the total purchase price. Keep in mind that if you might want to invest more than 5% if you are able to. The less that you borrow, the less interest you have to pay over the course of your mortgage period.
Learn more about Canada’s First Time Home Buyer Advantage here.
What’s the Minimum Amount That I Have to Put Down?
If you are unsure how to calculate your minimum down payment, consider your total purchase price:
If Your Purchase Price is $500,000 or Less…
You will need a minimum down payment of 5% of this price.
If Your Purchase Price is Over $500,000…
This is a little trickier. Your minimum down payment will be 5% on the first 500,000 in addition to 10% of the remainder of the purchase price over $500,000.
For example, if the purchase price of your home is $600,000, your minimum down payment will be 5% on the first $500,000, for a total of $25,000. On the remaining $100,000, your minimum down payment will be 10%, for a total of $10,000. Add both totals together and your minimum total down payment would be $35,000.
For more information, the Government of Canada’s website offers an extensive down payment guide with requirements for purchasing homes.
Did you know that at Trico, we offer a Flexible Down Payment Plan if you are looking to purchase a townhome or condo?
With our FlexDown Plan, you only need $1,000 to get started – and can make additional monthly payments until you reach the required 5% down payment. To learn more, please reach out to one of our home experts or visit any of our showhomes.
Tax-Free Savings Account
A TFSA (Tax-Free Savings Account) can also be a great place to save your down payment money. The money can grow tax-free in this account. This means you won’t have to pay income tax on the money you earn as it grows in this account. Consult with your financial planner or advisor for more information about Tax-Free Savings Accounts.
RRSP Account Holders
If you have an RRSP (Registered Retirement Savings Plan), you can withdraw up to $25,000 per person or $50,000 per couple to use for your down payment. This amount is non-taxable if you repay it within 15 years.