What Are The 5 Down Payment Mortgage Options In Canada?

To purchase a home, you’ll always be required to make a down payment of at least 5%. Many people reach a fork in the road when it comes to facing a down payment, but there are ways to successfully afford that down payment if you take the necessary actions. There are 5 down payment mortgage options in Canada that can help you reach your goal of successfully acquiring the down payment for your home.

Approaching homeownership can be a frustrating process for some. With all of the many different decisions involved, it’s easy to get overwhelmed by it all. If you’re currently looking for a home, it’s a good idea to take a step back and see how your financial situation is going. You’ll want to keep a list of all of your expenses and all of your income streams. There are a bunch of different apps out there that can help you with that, but even a simple spreadsheet can go a long way, as well.

After you’ve gotten a better grasp of your financial situation, the next step is considering some of the options out there for affording a minimum down payment for a mortgage in Canada.

5 Down Payment Options In Canada

Develop A Strong Savings Plan

Not everyone has a savings plan that they carefully follow from month to month. If you work for an employer that deposits your income in the same bank account every two weeks, try splitting those payments up into different bank accounts. If you save around $200 every two weeks into a savings account that you don’t touch, it would reach over $17,000 in around three years of time. That means you’ll have your 5% down payment for a mortgage in Canada on a $350,000 purchase price of a home.

Let Your RRSPs Do Some Work

Getting your RRSPs to do some work for you in conjunction with the Home Buyers’ Plan can go a long way in securing a down payment. You’ll be able to take out around $25,000, but be sure that you’re aware that you’ll have to repay that amount in 15 years.

Ask A Family Member For Help

If you have a family member that’s financially stable, asking them for some assistance in affording the down payment might be a wise option. They can do a gifted down payment that will cover the full down payment required for your home. All that’s required is a gift letter to be signed with the down payment amount that states that the gift doesn’t have to be repaid. The gift will need a phone number and address on it so that mortgage lenders will be able to verify all of the details on it.

Cash Out On Your Investments

If you have any investments saved up, you can always cash out on them, but you’ll want to keep in mind that there could be taxes on them once you do so.

Consider Loans Or Lines of Credit

Sometimes mortgage lenders will allow people to use lines of credit, personal loans, and even credit cards as an option for affording a down payment on a home. With the minimum down payment in Canada being 5%, many people have credit cards with credit limits that reach that high. If you’ve kept a great credit rating throughout the years, have had a stable history of employment, and are able to surpass all of the qualifications stipulated by the lender, you should be good to go.

Carrying The Plan Forward

After you’ve gotten a better grasp on your entire financial situation, giving one or all of these steps a try is a recommended idea in order to get your pre-approval for the mortgage. The pre-approval process will let you know what mortgage amount you’ll be able to secure.

Dealing with down payments on a home when you aren’t entirely sure of your financial situation can be a daunting task for anyone to go through. Carefully following these steps will gradually give you a greater sense of confidence as you begin your journey to saving up for your down payment.

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