How much money should you put down on your first home?

In Canada there are a few requirements when it comes to how much money you have to put down on the home you wish to buy. It comes down to how much the house you are planning on buying costs. If the purchase price is less than $500,000 the minimum down payment is 5%. If the purchase price is between $500,000 and $999,999 the minimum down payment is 5% of the first $500,000 and 10% of any amount over $500,000. If the purchase price is $1,000,000 or more 20% is the minimum down payment. If you plan on putting down less than 20% of a down payment there is one thing that needs to be considered. On any mortgage where the down payment is less than 20% it is required that the buyer has mortgage default insurance, commonly referred to as CMHC insurance. It protects the lender in the event that the borrower defaults on the mortgage. According to a recent TD Canada Trust Home Buyers Report1, 30% of homebuyers plan to or have at least a 20% down payment, the point at which mortgage default insurance is no longer required. The size of your down payment influences three things; the home price you can afford the size of your mortgage and monthly payment, and the amount of CMHC insurance you pay. So when it comes down to “how much” should you put down you need to keep in mind that it needs to be at least 5% and if you can get away with it try to save enough to push that to the 20% mark at least so that you don’t have to also pay for CMHC insurance.

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