By the Numbers: How Much Do You Need For a Down Payment?

Posted by Justin Nolette on June 11, 2018

When it comes to down paymentsthe law requires at least five per cent of the home's overall purchase price as a deposit. But being able to put down more will put you in a better position; you’ll have more equity in the home and less to pay in terms of mortgage insurance

The premiums can be blended in with your mortgage loan payments. By protecting lenders against borrower default, CMHC Mortgage Loan Insurance creates an opportunity for Canadians to realize their dreams of homeownership by having 5%. 

The cost of a brand-new home varies depending on the style decisions you make. You might start the process of buying thinking you have enough of a down payment saved, but once you factor in additional expenses such as upgrades, you may not have enough. 

We wanted to make this a bit easier to understand using actual examples. For each of the types of homes Sterling offers, we’ve calculated down payments based on the actual asking price of our quick possession models currently on the market at the minimum five per cent.

According to the Canadian Real Estate Association (CREA), it takes the average Albertan at least 102 weeks to save their down payment.For this reason, we've also calculated how much you'd have to save each month over the course of that time in order to afford a new home.

By the Numbers: How Much Do You Need For a Down Payment? Townhome ImageTownhomes

Sterling’s townhomes start at around $289,000. If you were to purchase the base model of the most affordable floor plan, this would mean you’d need a down payment of around $14,450.

Our move-in ready Caliber townhome in the community of Sienna costs $314,825. If you were to purchase this exact model, you’d need a down payment of around $15,742.

Savings per month over two years: 

5% = $600.00

Duplexes

Duplex homes offer slightly more privacy while still cutting costs by sharing some of the exterior building costs. Sterling’s duplex homes start at $330,000. At this price, you’d need a minimum down payment of $16,500.

We currently have a 1,500 square foot duplex home, the Delwood available in the Glenridding Heights for $374,900 - a minimum down payment of only $18,745. 

Savings per month over two years: 

5% = $781.00

Laned Homes

Laned homes in Edmonton offer plenty of privacy. The garage is not attached to the home and many buyers find this look more appealing. These home start at $350,000. For this basic model, you’d need a minimum down payment of $17,500. 

Our Evans A model, move-in ready and waiting in Cy Beckeris available for only $380,900. To buy it, you’d need $19,045 as a minimum down payment.

Savings per month over two years: 

5% = $793.00

By the Numbers: How Much Do You Need For a Down Payment? Showhome ImageFront-Attached Homes

Front-attached models are a popular choice for those looking for single-family homes. They offer privacy and the convenience of having the garage attached to the home. Sterling’s front-attached homes start at an affordable $400,000 - a $20,000 minimum down payment.

You usually see more variations in price when it comes to front-attached homes due to square footage. Obviously, a home that’s 1,800 square feet will cost less than a home that’s 2,400 square feet.

For instance, Sterling currently has the 1,751 square foot Trista B in Allard priced at $499,900. If you wanted a home like this one, you’d need a minimum down payment of $24,995.

Savings per month over two years: 

5% = $1,041.00

Getting Your Down Payment

Now that you have an idea of how much you might need for the home you want, you can make a plan. If you’re relying on savings, it may seem like an insurmountable amount, but you have to make a commitment to save each month. It will take a little while, but you’ll get there! Other options to consider are:

The Home Buyers' Plan - You can borrow up to $25,000 from your RRSPsA couple could also combine their borrowings for a $50,000 down payment. This is a good choice for first-time buyers because it allows them to get into a home and start building equity.

Down Payment Assitance Programs - Working with a good homebuilder means you'll have down payment flexibility. For example, Sterling makes your down payment easy by allowing you to pay in instalments while your new home is being built, among other helpful incentives. They'll even help you arrange financing!

Gifted Down Payments - Of course, it's always possible for your family to help you with your down payment in the form of a gift. There are a few rules though; gifters are required to sign a "gift letter" verifying the money is indeed a gift and does not have to be repaid. Lenders may also require verbal verification as well as information as to where the funds are coming from (i.e. Mom and Dad's savings account). 

Those who currently own a home usually use their home’s equity as a down payment on the next one, but you have to be certain you’ll have enough money after the sale of your home. Remember you’ll have to pay back the balance on your mortgage and pay fees to your real estate agent.

Getting a down payment can seem like a challenge, but with proper planning, it becomes easier. Knowing how much you’ll need for your home is the first step in the process.

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Photo credits: calculating

Tags: money matters, building a home

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