Hello! I often get phone calls from people conveying a lot of confusion around how much they are required to have for a down payment. Most people aren’t aware that you can actually still get into homeownership or buy another home with very little down payment. So, let’s clarify this;

First-time homebuyers: First time home buyers can still get into home ownership with as little as a 5% down payment. As long as you are buying a home that you will actually be living in, you can still buy that next home with as little as 5% down. I often get clients that come in and they have decided that they want to keep their current home, convert it into a rental and buy another property which they’re going to move in to. Even with this type of purchase, you can still put as little as 5% down. Whether it is your 1st or 4th home, as long as you will be living in it, then the down payment is only 5%.

Investment purchase: If you’re looking at buying something like a rental property you do have to have a 20% down payment.

Second home or vacation home purchase: If you’re buying a property as a second home, possibly a vacation property or a place for a family member to reside it, then that requires only a 5% down payment.

Another area of confusion and bewilderment can come from the allowable sources that can be used for down payment. So, let’s clarify this;

Savings: Of course, you can use the traditional down payment sources such as your own savings. If you are saving up your own down payment we do require a 90-day history of where those funds came from just to satisfy the anti-money laundering guidelines. Savings can also include your RRSP’s or TFSA or any other registered account that you have been putting money away in.

Gift: You can also obtain a gift as a form of down payment. If you have an immediate family member that is willing to gift you your down payment then that is an acceptable source. It does have to be an immediate family member though and they must be willing to sign a gift letter.

Borrowed down payment: Lots of people are shocked to hear that you can actually borrow your down payment. If you’ve got a pretty good credit profile client you can actually come to us and have no down payment at the time. We work with lenders where we can obtain a loan and use that loan as your down payment on your mortgage.

With so much confusion around down payments and their requirements. Helping clear up the details and let you know that homeownership, or the purchase of your next home, might not be so far out of reach. If you would like to chat further about your specific situation please don’t hesitate to reach out.