Despite rising prices, the Canadian dream of owning a home is alive and well and buyers are more determined than ever to buy a home.
But, as we all know, the home buying process can’t begin without a down payment, and the amount you need to put in varies from coast to coast.
When buying a home in Canada, the down payment required for a mortgage is determined by the purchase price of the home. Therefore, you have to pay a certain percentage (or more) of the total purchase price of your home.
The minimum down payment in Canada for homes valued at $ 500,000 or less is 5%, whether you’re a first-time buyer or buying your second home. In other words, a $ 500,000 home would require a down payment of $ 25,000.
READ: The first-time home buyer incentive helps virtually no one in big cities
On average, homebuyers in Ontario and British Columbia spend the most on a home, with down payments varying between 20% and 22%, respectively, according to the latest forecast from the Canadian real estate and housing market in Canada. LowestRates.ca, who analyzed the data. of the five provinces where it sees the most mortgage submissions.
The report found that Ontario homebuyers paid an average of $ 140,215.37 – or 20.35% – in down payments in the first quarter of this year, behind British Columbia, where homebuyers spent in average $ 159,762.64 – or 22.45% in installments.
The report says that the average down payments in Ontario and British Columbia are around 20% because the average price of homes in those provinces is close to $ 1 million. A home worth $ 1 million or more is not eligible for CMHC mortgage loan insurance, so the down payment must be at least 20%.
Homebuyers in Ontario paid on average more than $ 81,000 more in down payment than homebuyers in Quebec, which had the lowest average down payment rate of the five provinces at 14.68% ($ 58,571.68).
In comparison, Nova Scotians pay an average payment of 18.54% ($ 57,781.46), while Albertans pay about 15.15% ($ 62,929.45)
As Canadian home prices continue to rise, down payments and mortgages will rise thereafter.
According to the report, new mortgages in Canada grew 41% year-on-year in the first quarter of 2021, and the average amount borrowers were approved for new mortgages increased 20.5% to 326 $ 930, according to recently released data from Equifax.
And despite a decline in Canadians’ credit card balances (its lowest point in six years), the number and size of mortgages taken out by Canadians has pushed the nation’s consumer debt to about 2.1 trillion. of dollars.
However, the new changes to the mortgage stress test should help cool the market and reduce the pool of qualified borrowers. According to the revised test, the minimum allowable rate for uninsured mortgages – residential mortgages with a down payment of 20% or more – will either drop to the contract rate plus two percentage points or to 5.25%, whichever is greater, which is a slight increase from the previous threshold of 4.79%.
Although, despite recent changes, some argue that the new measures are not enough to balance Canada’s searing housing market and that more work needs to be done to see significant price cuts.
When Ainsley isn’t writing about real estate, local developments, and beautiful homes she would have loved to live in, you can usually find her exploring Toronto, cooking, home exercise, or hanging out with it. her cat, Jerry Seinfeld.
More from the author