Down Payment Mortgage: What?s the amount?

Posted by CanadaInnovativeFinancial on January 12th, 2018

People have lots of queries regarding residential mortgages and down payment related to buying a property. Depending on the types of properties, such as condo or vacant land or house etc, the procedure of down payment gets changed. Apart from property types:

1. Place of property

2. Income of the buyer

3. Credit rating

And many other important factors on which the policies for Down Payment for a Mortgage vary.

If you are going to buy a vacant land which wills not going to be used for residential purposes, then different guidelines for mortgages applies. For all types of non-residential properties here the equity requirements normally varies in the range of 25% to 50% of the purchase value of the property.

Now, if any property purchased for residential purposes, then the buyer needs to pay just 5% as Down Payment Mortgage. This option of 5% down payment applies to all the buyers. Certain norms are required to be fulfilled such as loan must be CMHC insured. Again, if you are looking for renewal of any mortgage, then it is just necessary to transfer the mortgage amount without any cash. In case of refinancing any property or purchasing a rental property, the down payment or equity must be 20% or more.

There are certain areas where the down payment requirements can become higher. In case the value of the property becomes too expensive, the lenders think to diminish the value of the maximum loan amount. One restriction is that where the buyer is going to purchase a property of up to 1 million dollar, the minimum down payment will be up to 7.5%. However, as soon as the property purchase price goes over million, the minimum down payment will range from 20% to 25%. If the borrowers have poor credit record, then in case of other requirements they need to make the down payment at least 10%. Down payment should be done at least 20% to 25% for those who is under credit difficulties and want to refinance any property.

Separate rules applied for self employed persons, who do not show much income in the income tax returns, are needed to pay 10% to 35% down payment. In case of 35% down payment both the income and credit point do not matter to the lenders. Now, if any property buyer wants to buy a property of a good value and want to make payment in installments, then at least 30% to 35% down payment of the whole project is to be made.

At the end in short we can say that down payment requirements or better to say the amount of money you need to pay as down payment will depend completely on the combination which is made based on the type of property and value, be it’s a purchase of property or refinance case, and lastly it is depended on the qualifications which the borrower is having. Seek the assistance of the professionals of the industry if in case you are finding that the calculation difficult at your end.