How much will it cost
Understanding the True Cost of Buying a Home
All lenders require a minimum down payment of 5% to approve financing. But your down payment isn't the only cost to plan for at closing — legal fees, property tax adjustments, and land transfer tax also factor into the total amount you'll need.
A Real-World Example
Let's say you're purchasing a home for $350,000, with a closing date of June 30th, and the property taxes are $4,000 per year. Here's how the closing costs break down:
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Minimum down payment (5%): $17,500
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Legal fees (including title insurance): approximately $1,500
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Property tax adjustment: $1,972 — calculated as $4,000 ÷ 365 days × 180 remaining days in the year
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Land transfer tax: $3,500 — 1% of the purchase price or assessed value, whichever is higher
Total cash needed at closing: $24,472
As you can see, it's important to budget for more than just your down payment. Reach out and I'll walk you through exactly what to expect for your specific purchase.
Down payment options
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Gifted Down Payment - The Down payment can be gifted. A Gift Letter will then be required.
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Gifted Equity - Gifted Equity occur when a someone is selling a property to another family member. An appraisal is required in all cases.
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Own Resources funds - If you have funds in your account, the lenders will require proof by way of 90 days bank statements to confirm that they are from your own resources.
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Borrowed from other Credit - As long as your debt ratio is still in line, some lenders will let you use borrowed funds to purchase a house under their Flex Program.
Mortgage Insurance - CMHC, Genworth, Canada Guaranty
Mortgage insurance is required when purchasing a house with a down payment between 5% and 15%. When using 20%, the insurance is not required. In most cases, the lenders are offering lower rates when the loan is insured. This insurance is not the same as life insurance. It covers the bank in case of default on payments and foreclosure. The premium is added to the mortgage.
Here's how the premium are calculated;
Up to and including 65% 0.60%
Up to and including 75% 1.70%
Up to and including 80% 2.40%
Up to and including 85% 2.80%
Up to and including 90% 3.10%
Up to and including 95% 4.00%
Up to 25% premium refund may be available when CMHC Mortgage Loan Insurance is used to finance an Energy-Efficient Home.