When it comes to buying a home, most Canadians don’t pay for the full cost of their home all at once. Generally, the money to finance the purchase of a new home comes from two sources:

1. Your mortgage

This is the money you will borrow from a lender, such as a bank.

2. Your mortgage down payment

This is a lump sum of your own money you will put against the cost of your home. The more money you put down, the less you need to borrow, and the lower your overall interest costs will be.

Depending on your employment history and immigration status, here’s how much down payment you’ll need to buy your first home in Canada.

Down payment with two years’ employment history

Generally speaking, if you can show that you have been working for two years and if you can afford to put down at least 20% of the purchase price, you may qualify for a “conventional” mortgage. The benefit of a conventional mortgage is that you don’t need to purchase default insurance. If you don’t have 20% to put down, you may qualify for a mortgage but it will need to be insured against default.

Down payment without two years’ employment history

If you have a substantial down payment (35% or more), and you are not able to provide the usual confirmation of employment / income to qualify for a mortgage, you may be able to be qualified to obtain a mortgage.

If you don’t have the 35% down payment, then you may still qualify to get a mortgage, but it will need to be insured against default. The following are some guidelines for this situation:

  • You must have immigrated to Canada within 5 years.
  • You must have permanent residence status.
  • You must have a minimum of three months’ full time employment in Canada.
  • You may be required to obtain a letter of reference from your bank in your home country.

Saving for a mortgage down payment isn’t always easy, and everyone’s mortgage needs are different. Fortunately there is a wide range of mortgage options to suit your budget, circumstances and goals. There are also some effective ways to accelerate your savings – such as automatic transfers to a savings or investment account – that can help you buy your first home faster.

Talk to a Mortgage Specialist

A mortgage specialist can meet with you anywhere to provide you expert advice and help with:

  • Your mortgage pre-approval
  • The purchasing process
  • Mortgage rate inquiries
  • Realtor referrals
  • Advice on how to build your down payment