Spring often activates the urge to not only get up and go, but sometimes pack up and leave! Before you make a move to move, it's important to refresh yourself on some home-buying basics. One of them is recognizing how the minimum down payment on a home is calculated.
To buy a house in Canada, your minimum down payment depends on the home's purchase price:
- If the home costs $500,000 or less, you'll need a minimum down payment of 5 percent.
- If the home costs between $500,001 and $999,999, you'll need 5 percent of the first $500,000 of the purchase price, and then 10 percent for the portion of the purchase price over $500,000.
- If the home costs $1 million or more, you'll need a minimum down payment of 20 percent of the purchase price.
- Note that if you're self-employed or have poor credit history, you may be required to provide an even larger down payment.
As a current homeowner, you may have built up enough equity to allow you to put down more than 20 percent on your next home. But should you?
While there are many excellent reasons to put as much money towards your new house as you can, you also don't want to leave yourself "house poor," with little to no discretionary income once you move in.
Let's discuss what makes sense for you, and also go over any changes in the real estate market since the last time you moved.