Saving your Down Payment
You’ve worked so hard to save up enough money to put towards buying a home, how do you show the lender you have your down payment ready?
While down payment may seem like an easy condition to provide, it can sometimes work out to be the opposite. This is because there are strict rules and regulations when it comes to how down payment is provided and approved that must comply with the government's anti-money laundering practices and let’s be honest, who isn’t e-transferring money to friends and family every day to pay back for that coffee hangout you went on.
Acceptable sources of down payment are as follows:
- Saved from own resources (savings/chequing account, TFSA, RRSP)*
- Gifted from an immediate family member (parent, grandparent, sibling, child)
- Borrowed from a line of credit/credit card - if borrowing is your plan, you will need to qualify using a specific program, which I can guide you through.
*A little tip here to make things as easy as possible. If you don’t have a separate savings account open already (TFSA or RRSP is recommended but not necessary) set aside your down payment in that account and leave it there for a minimum 90 days, if you want to continue to save set up automatic contributions so that the funds are transferred automatically and it is easy to track. When it comes time to provide your down payment a 90 day history from that one account should be all you need providing there aren't any large transfers (over $1,000) in that time period. If there are transfers over $1,000 confirmation of source will be required.*
There are a couple of programs available as a first-time home buyer that you can take advantage of.
- Home Buyers Plan - Home Buyers Plan and Home Buyers Plan Withdrawal Form
- First Time Home Buyers Incentive: placetocallhome.ca
As always, I am here if you have any questions.