When purchasing a home in Great Vancouver, understanding the minimum down payment requirements is crucial. These requirements vary based on the purchase price and location of the property, and recent changes in December 2024 have introduced a higher threshold for insured mortgages for properties priced under $1.5 million. Below, we’ll break down the current rules to help you navigate the home-buying process with confidence.
Properties Under $1.5 Million
For homes priced below $1.5 million, the minimum down payment is calculated as follows:
- 5% of the first $500,000 of the purchase price.
- 10% of the portion of the purchase price above $500,000, up to just under $1.5 million.
Example:
If you are buying a home for $900,000, your minimum down payment would be:
- 5% of $500,000 = $25,000
- 10% of $400,000 = $40,000
Total Minimum Down Payment: $65,000
Properties $1.5 Million or More
For homes priced at $1.5 million or above, lenders use a sliding scale to determine the minimum down payment. For illustration, let’s use Scotiabank’s sliding scale as an example:
- 20% of the first $2.25 million of the purchase price.
- 40% of the portion of the purchase price exceeding $2.25 million.
Example:
If you are buying a home for $3 million, your minimum down payment would be:
- 20% of $2.25 million = $450,000
- 40% of $750,000 (the amount over $2.25 million) = $300,000
Total Minimum Down Payment: $750,000
Key Considerations
- Mortgage Insurance:
- Homes priced below $1.5 million require mortgage insurance if the down payment is less than 20%.
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Homes priced at $1.5 million or more require a minimum 20% down payment, making them ineligible for mortgage insurance.
Affordability and Budgeting:
- Larger down payments can reduce your overall mortgage amount and monthly payments.
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Factor in closing costs (typically 1.5% to 4% of the purchase price) when budgeting.
Additional Lending Criteria:
- Individual lenders may have additional requirements, so it’s essential to consult with a mortgage professional.
Why Understanding Down Payment Requirements Matters
Your down payment is not just a stepping stone to homeownership—it also determines the size of your mortgage and influences your financial commitments over the long term. Knowing the minimum requirements helps you:
- Plan your savings effectively.
- Understand what types of properties are within your budget.
- Prepare for lender and regulatory expectations.
Navigating down payment rules can seem complex, especially with recent changes. Working with an experienced mortgage broker ensures you understand your options and receive guidance tailored to your financial situation and goals.
Have questions about down payment requirements or need personalized advice? Contact us for clear, simple, and strategic mortgage guidance tailored to your needs.