How Much Money Do I Need to Save to Buy a House?
If you are looking to buy a house in Canada, you will need at least 5% for a down payment. Since the average price of a single detached home in Canada is $498, 493, that would mean that you would have to have at least a down payment of $24,947 for that particular home. Keep in mind however, that this represents the average home price and that homes may be more or less expensive depending on where you live. A good resource to discover the average home price in your city is the Canadian Real Estate Association National Price Map.
Where Can I Get My Down Payment?
Saving up for a down payment on a house might seem like an impossible task, but if you set your mind to it, it is possible. There are also a number of tools and strategies that can help you achieve this.
One of the most obvious ways to get your down payment is through your personal savings. If you are putting aside money for a down payment, there are a number of savings vehicles that you can use including GICs and TFSAs.
If you are a first-time homebuyer, you have the option to borrow some or all of your down payment from your RRSP under the Home Buyer Plan. The maximum amount that you can withdraw was raised in 2019 to $35,000 – easily enough for a down payment on an average Canadian home.
Keep in mind however that if you use the Home Buyer Plan for a down payment, you will need to repay the money back into your RRSP over a period of ten years.
Many young first-time buyers rely on the help of family and friends to obtain a portion of their down payment. Most lenders will allow buyers to accept a gift to help them with their down payment however it must be made legal with a letter signed by both the giver and the receiver that the money is a gift.
You may be able to borrow money for your down payment, however not all lenders allow this so it is important to consult with your mortgage broker first. Generally, lenders want to know that the home buyer is financially stable enough not to have to borrow money for their down payment.
If you are considering buying a home, and you would like to speak with a qualified mortgage broker on how you can be ready to purchase a home faster, contact Matrix Mortgage Global today.