Asked & Answered

Local expert answers reader questions

Q: How much money do I need to purchase a home? A:

What a great question and one we get asked often.

Under mortgage lending guidelines, a purchaser is required to have 5% of the purchase price as a down payment. Looking at a purchase of say $250,000, you will need a down payment of $12,500.

There are several options available to deal with your down payment. The most effective means is to save your down payment funds in an RRSP. This will give you the opportunity to save on income taxes while saving for your home purchase. RRSP guidelines, allow you to withdraw up to $25,000 from an RRSP, provided you are a first time homeowner, and you use the funds towards the cost of purchasing a home. You may also have down payment funds gifted to you from a family member and in some cases, depending on your situation; you may be able to borrow funds separately for your down payment.

In addition to the down payment, you will also require sufficient funds to cover the costs associated with buying a home. These costs are made up of lawyers fees, provincial registration fees, title insurance, home inspection, obtaining property insurance, covering property taxes and other sundries. These costs will run you approximately $ 4,000-5,000. In summary, for a purchase of $250,000, you would need resources of $17,500 or so.

Consulting a mortgage professional will help you work out the best plan for your unique situation.

If you have ANY mortgage or credit questions ANY time, please feel free to contact me at claude.sullivan@ecmb.ca or 709-763-1131