The minimum downpayment when purchasing a home is 5 percent. This is no longer restricted to first time buyers (since 1998) , and there is no longer a restriction on the maximum purchase price(since 2002). While most Canadian homebuyers save this money, some lenders will allow the minimum five per cent to come from other sources.
The 5% down payment can come from borrowed funds, for example from a line of credit or family member. The amount borrowed for a down payment is factored into debt service ratios, however, which determines your mortgage affordability.
The 5% down payment can even come from a cash back feature of some mortgages. However, you will pay the posted rate rather than the discounted rate for this privilege, and would also be subject to wage and strict credit rating approval. In addition to the down payment, according to Canadian Mortgage and Housing Corporation (CMHC) rules, you will also be required to have 1.5% of the purchase price to cover the closing costs.
The other option is 100% financing - The lenders insure the mortgages themselves, though again the qualification process is very stringent, and the interest rate is higher. The risk factor gets built into the product! If the downpayment has been gifted, it must be documented, in the form of a letter by the giver that that the money is a true gift and not a loan. The funds must be in the borrower's account a minimum of 15 days before closing.
