First-time homebuyers in Canada have several options when it comes to down payments. A down payment is the money you put towards the purchase of a home, and it is typically a percentage of the total cost of the home. Here's what you need to know about down payments for first-time homebuyers in Canada:
Minimum Down Payment:
The minimum down payment required for a home purchase in Canada depends on the purchase price of the home. For homes with a purchase price of up to $500,000, the minimum down payment is 5% of the purchase price. For homes with a purchase price of between $500,000 and $999,999, the minimum down payment is 5% of the first $500,000, and 10% of the portion of the purchase price above $500,000. For homes with a purchase price of $1 million or more, the minimum down payment is 20% of the purchase price.
First-Time Home Buyers Incentive:
The First-Time Home Buyers Incentive is a program offered by the Government of Canada to help first-time homebuyers purchase a home. The program provides a shared-equity mortgage of up to 10% of the purchase price of the home, which can be used towards the down payment. This means that the buyer only needs to come up with a minimum down payment of 5% instead of 10%. The shared-equity mortgage must be paid back within 25 years, or when the home is sold, whichever comes first.
Home Buyers' Plan:
The Home Buyers' Plan is a program offered by the Government of Canada that allows first-time homebuyers to withdraw up to $35,000 from their Registered Retirement Savings Plan (RRSP) to use towards the down payment on a home. The funds must be repaid to the RRSP within 15 years.
In summary, first-time homebuyers in Canada can put down as little as 5% of the purchase price of the home. They may also be eligible for programs such as the First-Time Home Buyers Incentive and the Home Buyers' Plan, which can help them save for a down payment. It's important to work with a mortgage professional to determine the best down payment strategy for your specific financial situation.
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