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Saving for your first home

Every day, you check real estate listings online. On the weekends, you drive through neighborhoods seeking out ‘For Sale’ signs. It may be safe to say, you’re on the fast track to purchasing your first home.

Are you financially prepared for potentially the largest purchase you’ll ever make?

Do you have enough money for the down payment and for the monthly household costs that will follow for many years?

Good questions – and ones that Canadian home buyers plan to approach in a variety of ways. The minimum down payment in Canada is 5% with the average down payment ranging from 5%-20% of the home price.

A down payment of less than 20% (called a high-ratio mortgage) requires mortgage default insurance offered through a provider such as Canada Mortgage and Housing Corporation (CMHC), Genworth Canada, or Canada Guaranty that protects the lenders in case of borrower default. The premiums are calculated as a percentage of your mortgage amount and are paid off over the life of your loan.

The amount of your down payment affects:

  • The home price you can afford
  • The size of your mortgage and monthly payment amount
  • The amount of mortgage default insurance you’ll pay

Buying your first home and figuring out how to pay for it isn’t as easy as it might seem – and your choices will stay with you for many, many years. Your professional advisor can help you make the right choices for you.

Reviewed: February 3, 2015

Written and published by Investors Group as a general source of information only. Not intended as a solicitation to buy or sell specific investments, or to provide tax, legal or investment advice. Seek advice on your specific circumstances from an Investors Group Consultant.