Buying a house for the first time is a big and important decision in your life. As someone who represents you and looks out for your best interest, I would like to introduce you to few things you should know.
As a first-time homebuyer, you’ll want to be familiar with various programs that apply to your situation. Whether it’s a rebate you may qualify for, a tax-efficient way of funding your down payment, or the minimum you must put down for your home purchase, there’s information you need to know to navigate the buying process and potentially save yourself some money along the way.
Here are some of the key things you’ll want to be aware of:
Mortgage default insurance—often known as CMHC Insurance—may seem like a strange concept, but it’s relatively straightforward. If you have a down payment of less than 20% of the home’s value, you must purchase mortgage default insurance. But this doesn’t act as insurance for you. Rather, it protects your lender in case you don’t make your mortgage payments. It’s designed to make financial institutions comfortable with lending to individuals who don’t have a large down payment.
CMHC insurance isn’t available for homes with a purchase price of more than $1 million. As a result, anyone buying a house in excess of this amount must have at least 20% as a down payment on their purchase.
In Canada, you must put down a minimum of 5% as a down payment on your home. However, this only applies to homes with a purchase price of less than $500,000. It’s important to note that if you’re buying a home costing between $500,000 and $1 million, the federal government recently increased how much you must place as a down payment. With the new rules, you have to put down 5% for the first $500,000 but 10% on the amount between $500,000 and $1 million.