{"id":6491,"date":"2022-08-19T16:00:00","date_gmt":"2022-08-20T00:00:00","guid":{"rendered":"https:\/\/blog.justo.ca\/blog-admin\/?p=6491"},"modified":"2023-09-22T04:28:06","modified_gmt":"2023-09-22T12:28:06","slug":"how-much-is-a-down-payment-on-a-house","status":"publish","type":"post","link":"https:\/\/blog.justo.ca\/blog\/how-much-is-a-down-payment-on-a-house\/","title":{"rendered":"How Much is a Down Payment On a House?"},"content":{"rendered":"\n

It\u2019s no secret that the Canadian real estate market is growing at a fast pace. But, despite the low-interest rates and increasing supply that has fueled the industry growth over the last few years, current and future homeowners need to think about making a down payment in order to acquire their next properties without any problems.<\/p>\n\n\n\n

\"Calculating<\/figure>\n\n\n\n

The real estate market moves at break-beck speeds, so it\u2019s normal to ask yourself \u201chow much down payment do I need for a house?\u201d<\/p>\n\n\n\n

In this article, we\u2019ll cover the definition of a down payment and explain how this impacts the type of house you can afford. Additionally, we\u2019ll also give you tips on saving these funds for your dream home.<\/p>\n\n\n\n

Understanding Down Payments on Houses<\/h2>\n\n\n\n

Before going over the average down payment for a house in Canada, it\u2019s crucial to understand the role that these upfront costs play.<\/p>\n\n\n\n

Home buyers need to consider all expenses before completing the purchase, including closing costs<\/a>, the insurance premium, and the mortgage loan<\/a> interest rate. However, the biggest expense on this list is actually the down payment.<\/p>\n\n\n\n

In simple terms, the down payment helps financial institutions determine what type of loan you qualify for. Additionally, these organizations also decide what your interest rate will look like and the duration of your mortgage payments based on the size of your down payment.<\/p>\n\n\n\n

As a rule of thumb, you should evaluate different mortgage providers and work with the institution that provides you with the best deals.<\/p>\n\n\n\n

If you have a small down payment, you\u2019ll pay a higher home purchase price in the long run due to higher interest rates and other fees. Larger down payments can significantly reduce your property expenses, especially if you have a poor credit history when you get approved for the mortgage loan<\/a>.<\/p>\n\n\n\n

What is a Minimum Down Payment?<\/h2>\n\n\n\n

In simple terms, the mortgage down payment refers to the sum of money that you pay in order to cover part of the cost of your house. The idea is that the down payment will cover a small part while the mortgage loan will cover the rest right away. Once this process is completed, you\u2019ll only have to make mortgage payments to the bank or financial institution you\u2019re working with.<\/p>\n\n\n\n

The down payment impacts every single area of your mortgage loan. For example, a lower down payment means that you\u2019ll have to get a bigger mortgage, which will take longer to pay fully. You\u2019ll also have higher monthly payments if you only cover the minimum down payment requirements.<\/p>\n\n\n\n

This is the reason why most home buyers give themselves enough time to save up for down payments that are bigger than the minimum requirement.<\/p>\n\n\n\n

These families usually create a down payment fund way before starting the home buying process<\/a> and only engage their mortgage lender once they have a larger down payment than the bare minimum.<\/p>\n\n\n\n

Down Payment for First Time Home Buyer in Canada<\/h3>\n\n\n\n

If you\u2019re saving up for a down payment as a first-time home buyer<\/a> in Canada, you may qualify for incentives that will help simplify the whole process.<\/p>\n\n\n\n

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Select first-time buyers may qualify for a shared equity mortgage loan from the Canadian government. This type of loan allows the Canadian government to pay for your house without interest. In short, this is a fantastic program that can reduce your monthly mortgage payments while allowing you to put down a bigger down payment.<\/p>\n\n\n\n

Through the first-time home buyer incentive, you may receive:<\/p>\n\n\n\n