Down Payment Options and Pre-Approvals

As a first-time home buyer, you probably have lots of questions, including down-payment amount and whether you'll be approved for a mortgage.

An essential initial step before buying your home is to obtain a pre-approved mortgage. A pre-approval will show to sellers and realtors that you are a serious buyer, which can help in your negotiations.

Another benefit of having a pre-approval is that you will understand how much you can realistically afford and exactly what your payments will be prior to looking at homes. It also allows you to lock in your rates of interest with a 90 day warranty which is a great feature in case interest rates rise.

Homebuyers will usually need to have an appraisal of the residential or commercial property they are buying in order to acquire an approval of their purchase. Make certain to call your mortgage broker as they'll have the ability to assist you with this pre-approval process.

To determine the required down payment, there are a number of considerations:

Conventional Mortgage

  • A conventional mortgage requires a down payment of at least 20% and is offered on both a fixed or variable interest rate mortgage.
  • Conventional mortgages have the lowest carrying costs because they do not have to be insured against default. So, while it may take long to accumulate this type of down payment, it will also save on mortgage costs over the long run.

 Low Down Payment Insured Mortgage 

  • Most lenders now offered insured mortgages for both new and resale homes with lower down payment requirements than conventional mortgages-as low as 5%.
  • Low down payment mortgages must be insured to cover potential default of payment; as a result, their carrying costs are higher than a conventional mortgage because they include the insurance premium.


Using Your RRSP as a Down Payment

  • Under the federal government’s Home Buyer’s Plan, first-time home buyers are eligible to use up to $25,000 in RRSP savings per person ($50,000 for couples) for a down payment on a home. The withdrawal is not taxable as long as you repay it within a 15-year period. To qualify, the RRSP funds you plan to use must have been in your RRSP for at least 90 days.


When you are ready to search for your new home, contact your mortgage broker for assistance. Your mortgage broker will be able to help you get pre-approved and will be able to assist you in determining which of the above down payment options are right for you.

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