Christine Buemann Mortgage Broker

One of the most frequent questions that I get is how much is needed for a down payment? There is a common misconception that First Time Buyers are able to put 5% down and then every purchase after that is 10%. That is just simply not the case. Anyone in Canada can put 5% down. In order to purchase an investment property, you need at least 20% down. Every lender and insurer will also likely want to see that you have at least 1.5% of the purchase price available for closing costs. That is not what your actual closing costs will be, just a generic estimate. Your down payment can be saved, gifted or borrowed. For more information on down payments and for any mortgage related questions, please feel free to contact me today. www.christinebuemann.com

Consistently tightening mortgage rules combined with low interest rates have caused several lenders to revise their guidelines for gifted down payments. As per CMHC, the person gifting the funds has to be a relative and the funds have to truly be a gift (no repayment required). Traditionally, they have only required a gift letter signed by both parties along with proof of the funds being deposited into the recipient’s account. Several lenders have now adjusted their supporting document requirements and they will now need to see one of the following along with proof of the funds being in the recipient’s account: 1.        Proof of the funds being in the relative’s account prior to the transfer of funds 2.        A letter from the relative’s financial institution stating that they have adequate funds to cover the gifted amount   Lenders now have more pressure to evaluate the overall risk of a file and although CMHC...