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As a first time buyer beginning to do some research on your first home, where do you begin? Well, let's start at first base – Down Payment On A Home.

How much? When? Why? How? Where? All kinds of questions!!!!

The minimum down payment you** are required to put down on a home is 5% of the purchase price. Yes, if you are purchasing a brand new home that is subject to the all-mighty HST, it is 5% of the purchase price, including net HST after any applicable rebates. This 5% is preferred to have come from your own resources, such as accrued savings, or RRSPs (to be discussed on a later post), however many lenders and insurers are allowing your down payment to be "gifted" from an immediate family member. This is where a very nice member of your family kindly deposits 5% of your purchase price in to your bank account, and signs a Gift Letter stating that this money is a gift towards the purchase of your new home and never has to be repaid 🙂

The 5% down payment that you provide will form the start of your equity in your new home. As you pay your mortgage down and your home's value increases, this equity will grow.

I know there are some of you out there who are wondering about zero down mortgages. Are they available? Yes, there are a limited number of lenders out there who will provide you with 5% cash-back to form the down payment on your home, which is essentially a zero down mortgage, however you are paying higher interest rates for this cash back.

5% is the norm for most individuals. Count on that and begin your savings and you will be on your way to home ownership sooner than you expected.

**5% is the minimum down payment most people are required to put down on a home. If you are self-employed and in a situation where we will be needing to "state" your income, then you will be required to put down 10% of the purchase price. This is a new regulation as of April 2010.**


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