If you’re planning to buy your first home, saving up for all the costs involved can feel daunting, especially when it comes to the down payment. That might be because you’ve heard you need to save 20% of the home’s price to put down. Well, that isn’t necessarily the case.

Unless specified by your loan type or lender, it’s typically not required to put 20% down. That means you could be closer to your homebuying dream than you realize.

As The Mortgage Reports says:

“Although putting down 20% to avoid mortgage insurance is wise if affordable, it’s a myth that this is always necessary. Most people opt for a much lower down payment.”

According to Canada.ca, the minimum down payment you need is dependent on the purchase price of your home. For a $500,000 or less purchase price of a home, it’s 5% of the purchase price; For a $500,000 to $999,999 purchase price of a home it’s 5% of the first $500,000 and 10% for the balance; and For a $1,000,000 or more purchase price of a home, it’s 20% of the purchase price.

*Remember if your down payment is less than 20% of the purchase price of your home, you’ll typically need to buy a mortgage insurance.

The big takeaway? You may not need to save as much as you originally thought.

Learn About Resources That Can Help You Toward Your Goal

There are various first-time homebuyers' down payment assistance programs available throughout Canada (except in BC and ON). See the image below: 

Plus, there are various federal down payment assistance programs available for first-time homebuyer-qualified applicants. See the image below:

With so many resources available to help with your down payment, the best way to find what you qualify for is by consulting with your loan officer or broker. They know about local grants and loan programs that may help you out.

Don’t let the misconception that you have to have 20% saved up hold you back. If you’re ready to become a homeowner, lean on professionals to find resources that can help you make your dreams a reality. If you put your plans on hold until you’ve saved up 20%, it may cost you in the long run. 

“. . . there are plenty of reasons why it might not be possible. For some, waiting to save up 20% for a down payment may “cost” too much time. While you’re saving for your down payment and paying rent, the price of your future home may go up.”

Home prices are expected to keep appreciating over the next 5 years – meaning your future home will likely go up in price the longer you wait. If you’re able to use these resources to buy now, that future price growth will help you build equity, rather than cost you more.

What Does This Mean For You?

Keep in mind that you don't always need a 20% down payment to buy a home. If you're looking to make a move this year, reach out to me today to start a conversation about your homebuying goals.

source/credits: KCM, Mortage Reports, Canada.ca, Zolo.ca

Disclaimer: The above information is from sources believed reliable but should not be relied upon without verification. The publisher assumes no responsibility for its accuracy. You are encouraged to get independent legal advice before commencing any transaction.