Down Payments - Figuring Out How Much You Will Need

Posted Jan. 5th 2012 under Mortgages & Loans

The size of a down payment can vary. Depending on the type of mortgage, down payments generally range from 5% to 20% of the purchase price.

How Much will I Initially Need to Purchase my New Home?

The amount of money you will need to purchase your home includes funds to cover your down payment and closing costs, as well as the remaining balance on the cost of the home. This can be sourced through financing or other means.

A Larger Down Payment Means Greater Savings

The money you pay up-front for a house is called the down payment. Down payments are typically a percentage of the purchase price of the home. The source of money for your down payment is often either your savings or the net proceeds from the sale of a home you already own.

The larger your down payment, the more you save in the long run. A larger down payment will reduce the amount of your monthly principal and interest payment, as well as the total amount of interest you pay over the life of your mortgage

Brian Mill from Dominion Lending Centres can help you compare mortgages, determine which mortgage is right for you, and show you money-saving strategies.

Closing Costs

Closing costs are the legal and administrative fees and disbursements associated with buying your home. These costs are in addition to the purchase price of the home. Closing costs can vary widely depending on the property being purchased, services required, taxes, applicable insurances, closing dates affecting interest adjustments, and the balances of any prepaid expenses.

Ask About The Home Buyers' Plan

The Home Buyers' Plan (HBP) lets a first-time buyer withdraw up to $25,000 from RSPs for a home purchase. The withdrawn amount must be repaid within 15 years, subject to a minimum annual repayment that is 1/15 of the amount withdrawn. If the full $25,000 is withdrawn, the minimum annual repayment is $1,333. If less than the minimum is repaid in any particular year, the balance is added to the taxpayer's income. Visit the Canada Customs & Revenue Agency website for more information.