What are your down payment options?
The money for the down payment, which represents a portion of your home’s price, is not included in your mortgage and must come from your own financial resources (or gifted from a family member). The minimum down payment amount is 5% of the purchase price. Acceptable sources include:
1. RRSP Home Buyers’ Plan – allows you to use your RRSP for a down payment
• Qualifying purchasers can withdraw up to $25,000 each from their registered retirement savings plans (RRSPs) to buy or build a qualifying home without incurring tax penalties.
• The money is not taxable, but the RRSP must be repaid within 15 years, with minimum annual payments of 1/15th of the withdrawn amount.
2. Short-Term Investments or Savings – that will be cashed out.
3. Sale of Property – the financial institution will require the sale agreement (with no conditions) and the mortgage statement.
4. Gift – funds must be in your possession and a gift letter must be provided to the financial institution, stating that the funds are an outright gift.