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Home buyers can buy with 5% down payment if they are qualified for CMHC high ratio mortgages. If you are a first time home buyer, check out if you are qualified to withdraw your RRSP savings as down payment under the "home buyer's plan". In addition, find out if you are exempted from paying the British Columbia "property transfer tax".
When you are buying a home with less than 20% down payment, your mortgage is a high ratio mortgage. You are required to buy a home mortgage insurance to protect your mortgage lender against loan default. The insurance premium charged is dependent how much down payment is provided by you. The insurance premium may range from 1.00% to 2.75% of your mortgage amount.
Please refer to CMHC mortgage insurance premium table for details. The lesser down payment you provide, the more fee you need to pay. This insurance fee can be paid up front or added to your home mortgage. If you plan to buy a home with 5% down payment and get a high ratio mortgage, check with your local mortgage broker whether you can be approved for mortgage financing.
The 5% down payment can come from different sources such as lender’s cash back incentives, lines of credit/credit cards, arm's length personal loans or gifted down payment. Click on this link for more information on buying a home with 5% down payment.
If you are looking for a local Richmond Realtor to help you with your home buying needs, you can contact James Wong at 604-721-4817.
