A down payment is required when you choose to buy a home. Regardless of whether you buy a home in Toronto or Georgina, it is necessary. Although, they can vary depending on the cost of the home. A Markham house for sale might have a very different down payment in comparison to a Keswick house for sale. This is due to different housing markets and location values.
Let’s go over everything you need to know about down payments when buying a home.
How Are Down Payments Calculated?
A down payment is the amount of money you pay upfront when buying a home. This is not the upfront price, but a specific portion of it. It is a percentage of the total purchase price. If you buy a more expensive home, the downpayment will be higher inc comparison to a less expensive home.
If you want to get an idea of how much your down payment could be, use a down payment calculator. This way, you can get a realistic idea of what prices to expect.
Down Payment vs Deposit
A down payment is not the same as a deposit, however, both are similar and easily confused. Deposits usually come in the form of a certified cheque or a bank draft, as they are usually around $10,000. But, this number can vary depending on the home.
It is important to note that the deposit on your home will be deducted from the down payment you are expected to pay.
Down Payment Requirements
A down payment is made depending on the home you are buying. For homes below $500,000, the minimum payment is 5%. For homes between $500,00 and $999,999, the payment is 5% of $500,000, with an additional 10% of the remaining amount. These are the minimum requirements in order to get a mortgage as well.
If you liked this blog, check out this one on, “The Rent vs Buy Decision In Today’s Real Estate Market.”