Mortgage Down Payment Calculator – MoneySense
If you are thinking of buying a property, you probably know that you will need a down payment. This is the part of the purchase price that you pay up front that is deducted from the amount you owe on the property.
But how much will you need to save to cover the down payment on a property? Although there are minimum down payment rules set by the Government of Canada, it ultimately depends on the cost of the home you plan to buy.
What is a mortgage deposit?
Many people don’t have enough cash on hand to cover the full cost of buying a home. When this happens, buyers always have to pay a fixed amount up front. This is called the down payment. The amount you will need for the down payment depends on the purchase price and the minimum down payment rules set by the Government of Canada.
The down payment is only a fraction of the cost of home ownership. If you are unable to cover the full cost of the property, you will need to request a mortgagea kind of specialized loanto cover the remaining balance, which you will repay with interest over time.
Since your mortgage size is calculated by subtracting the down payment amount from the total purchase price, the larger your down payment, the smaller your loan, saving you tens of thousands. dollars in interest charges over the life of the mortgage.
If your down payment is less than 20% of the home’s value, you’ll also need to purchase mortgage loan insurance, with premiums typically ranging from 0.6% to 4.5% of your mortgage amount.
Using a mortgage down payment calculator is a good way to better understand how your down payment amount will affect your mortgage payments in the future.
How to calculate your mortgage down payment
In Canada, the minimum amount you will need to provide as a down payment depends on the purchase price of the home.
- If the purchase price of the home is less than $500,000, your minimum down payment is 5% of the purchase price.
- If the purchase price is between $500,000 and $1 million, the minimum down payment is 5% of the first $500,000 and 10% of the part above $500,000.
- If the purchase price is $1 million or more, you must have a minimum down payment of at least 20%.
For example, if the purchase price of the house you are interested in is $450,000, you could put down as little as 5% of your down payment, which would equal $22,500.