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The minimum down payment structure is as follows:

5% down for the first $500,000 of your purchase price

10% for the amount over $500,000 but under $1,500,000

Any purchase over $1,500,000 automatically requires a down payment of 20% for the total price.

Example calculation: If my purchase price is $650,000, the minimum down payment required is:

5% of $500,000 = $25,000

10% of $150,000 = $15,000

Therefore, minimum down payment required for a purchase of $650,000 is $40,000.

The idea in strengthening your application is making sure you can show that you can handle the mortgage payments. In simple terms - reduce your debt, increase your income, maximize your savings. There are several ways to strengthen your application, including:

• Paying down debt (like car loans, credit card debt)

• Saving more funds for a down payment

• Increasing your income (promotion, 2nd job, etc)

• Co-signors on your deal (parent, partner)

Sure! Some income that you may not think immediately of using would perhaps include:

• Child Tax Benefit (CCB) on the government

• Pension income

• Alimony

• Child Support

• Interest on investments

• CPP/OAS

If you have other sources of income that you’d like to see if qualifies toward your purchase, feel free to reach out!

Condo Fees

Condominiums have lower purchase prices, however the condo fees are an additional cost working against you in your qualification. If you were pre-approved for a freehold home and find a condo that you like, please reach out to discuss re-assessing your pre-approval if your goals change!

Property Taxes

When we pre-approve you, it is based on a rough estimate of property taxes. If the property you are considering has a much higher property tax from the initial pre-approval, it can alter your pre-approval as well. Feel free to send over the MLS and velomortgage.ca can reassess and tailor your pre-approval for this particular property.

There are a few programs that can assist with supporting your down payment, such as:

• Government of Canada’s Home Buyer’s Plan - Gives the ability to withdraw funds from your RRSP for first time homebuyers, up to $60,000. This program allows you to pay back the amount withdrawn within a 15-year period.

• Government of Ontario’s Land Transfer Tax Refund Program - When you buy land or an interest in land in Ontario, you pay land transfer tax. First-time homebuyers of an eligible home may be eligible for a refund of all or part of the tax, up to a maximum of $4,000. Other provinces may offer this as well.

Insured mortgages are mortgages that have less than 20% of a down payment. The insurance is at the cost of the borrower, but it is added to your mortgage balance. One thing to consider is that this mortgage insurance also charges HST, which does have to be paid at time of closing.

The amount charged by the insurers (CMHC, Sagen and Canada Guarantee are the three in Canada) is entirely dependent on the down payment put forward for the purchase.

• 5% - 9.99% down payment (LTV: 90.01% - 95%): 4.00% of the mortgage amount

• 10% - 14.99% down payment (LTV: 85.01% - 90%): 3.10% of the mortgage amount

• 15% - 19.99% down payment (LTV: 80.01% - 85%): 2.80% of the mortgage amount

If your mortgage is insured, there are benefits such as accessing better rates (as this insurance protects the lender in case of default) - so there are some benefits as well!