What is the minimum down payment required to purchase a home?

While most Canadian homebuyers save for a down payment, there is always the option for purchasers these days to arrange for the minimum 5% down payment through sources other than their own resources. These arrangements are subject to certain restrictions based on the qualification and the beacon score of the applicant(s). The 5% down payment can come from borrowed funds such as a line of credit, a loan or a family member. The amount borrowed for a down payment is factored into the debt service ratios, which determine how much of a mortgage you ultimately qualify for.

Another option for arranging the required 5% down payment can come from a cash back feature built into the mortgage offered by several lending institutions. In this case, the posted rate (undiscounted rate) will apply to mortgage term arranged for you. The 5% cash back is typically delivered to your solicitor on closing along with the mortgage funds required to complete the purchase transaction, and is deemed to be 100% financing. Please keep in mind that should you decide to discharge your mortgage before your term is up, the cash back will be refundable to the lender on a pro-rated basis.

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