Toronto Real Estate
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Amount of Your Down Payment
Your down payment is paid in cash and is not included as part of the
loan amount. The bigger your initial down payment, the smaller your
loan, which reduces the amount of your payments.
How much you'll put down depends on the cash you have available and
the amounts you'll need for closing costs and prepaid property taxes
and homeowners' insurance.
Mortgage plans have various down payment requirements and they can
range from 0% down on a VA (Veterans Administration) loan to between
3 and 5% down on a FHA (Federal Housing Administration) loans to 20%
down, the traditional amount for a conventional loan. In addition, special
state programs for first-time home buyers may set different sums, which
are usually lower than conventional financing.
If you put less than 20% down on most loans, you'll be asked to protect
the lender by carrying private mortgage insurance (PMI). Carrying PMI
ensures that the debt is repaid if you default on the loan. This adds
approximately an extra half a percent onto the loan.
FHA mortgages, in return for their low-down-payment requirements, also
charge for mortgage insurance premiums (MIP).
Further Information:
Planning Your Home Purchase
Checking Your Credit Rating
Pre-qualification and Pre-approval on a Mortgage
Becoming an Educated Buyer: Research Neighbourhoods
Becoming an Educated Buyer: Your List of Home Requirements
Assess Your Finances: Checklist
Assess Your Finances: Compare buying with renting
Assess Your Finances: Calculating the cost of homeownership
Assess Your Finances: What you can deduct
Interest Rates and How They Change
Closing Costs
Other Closing Costs
Figuring Out Your Monthly Income
Figuring Out Your Monthly Debt
Amount of Your Down Payment
How Much House Can You Afford?
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