When you are buying your first home or moving from one home to another it is important to know about the down payment for a mortgage. How much will you need for a down payment to buy your home, where can the down payment for a mortgage come from and the rules from the lender and the government.
The minimum down payment for an owner occupied property in Canada is 5%. The minimum down payment for a rental property in Canada is 20%. The cash back options available from lenders can no longer be used for down payment for a mortgage. Any cash back will be provided by the lender at funding or within a week and can be used for other expenses such as furniture, renovations or closing costs.
down payment for a mortgage
The down payment for a mortgage will be approved by the lender if it meets the following conditions.
1. The down payment is from your own savings or RRSP and you can show bank statements with the funds in your name for at least 90 days.
2. The down payment is gifted from a family member and you will be asked to sign a gift letter and show the transfer of gifted funds into your account prior to funding of the mortgage
3. The down payment is from the proceeds of sale of another property in your name, you can show the subject free sales agreement and mortgage statement for the property confirming the balance owed and proceeds from sale available towards the down payment for a mortgage on the new property
4. The down payment is borrowed from your unsecured line of credit and you will be required to qualify for the mortgage based on the payments for that loan
In the case of down payment for a mortgage coming from another country the funds must be in a Canadian bank account at least 30 days prior to funding and at least 10 days in Canada.
You can use up to $25,000 in RRSP funds per person on title for the down payment and these funds must be repaid to your RRSP account as per government guidelines.
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/hbp-rap/menu-eng.html
For any other questions on down payment for a mortgage please call me at 604 813 8402 or email pauline@mybcmortgage.ca