top of page


Ideas & information.

  • Mark Panizzon

Unlocking the Door to Homeownership: Demystifying Down Payments and Closing Costs

Embarking on the journey to homeownership is an exciting yet complex venture. Two significant financial considerations that often take center stage are down payments and closing costs. As a seasoned Canadian mortgage broker, I've witnessed firsthand the importance of understanding these aspects. In this blog, we'll unravel the mysteries behind down payments and closing costs, providing insights to help you navigate this crucial phase of the homebuying process.

Down Payments: The Foundation of Homeownership

  1. What is a Down Payment? A down payment is a lump sum payment made upfront when purchasing a home. In Canada, the minimum down payment required is generally a percentage of the property's purchase price.

  2. The Importance of Down Payments:

    • Building Equity: A down payment immediately establishes equity in your new home.

    • Lowering Mortgage Amount: A higher down payment reduces the amount you need to borrow, potentially leading to lower monthly mortgage payments.

Minimum Down Payment Requirements: In Canada, the minimum down payment is typically 5% of the purchase price for homes valued up to $500,000. For homes above this threshold, 10% applies to the difference.

Also, if your property value is over one million, 20% is required. If your property value is into the millions, then usually a sliding scale applies based on the purchase price. It could increase all the way up to 35% or more.

Saving Strategies:

  • Start Early: Begin saving for your down payment well in advance.

  • Take Advantage of Programs: Explore government programs and incentives that support homebuyers. Reach out to me for more details on these ever changing programs.

Closing Costs: The Final Hurdle

  1. What Are Closing Costs? Closing costs encompass various fees and expenses incurred in the final stages of a real estate transaction. They are separate from the down payment and cover a range of services.

  2. Typical Closing Costs:

    • Legal Fees: Hiring a lawyer or notary to handle the legal aspects of the transaction.

    • Title Insurance: Protecting against potential title issues.

    • Home Inspection: Ensuring the property is in good condition.

    • Land Transfer Tax: A provincial tax based on the property's value (BC only).

    • Moving Expenses: Hiring movers for your furniture and things.

    • Appraisal Fees: The bank may require an appraisal which you may have to pay for.

  3. Estimating Closing Costs:

    • Closing costs generally range from 1.5% to 4% of the home's purchase price.

  4. Budgeting for Success:

    • Consider closing costs when determining your overall budget for buying a home.

    • Work with professionals to get accurate estimates based on your specific circumstances.

    • Plan for at minimum 1.5% of your purchase price in addition to your down payment when budgeting.

Navigating the landscape of down payments and closing costs is a crucial step toward achieving homeownership. As a licensed mortgage broker in Alberta and British Columbia, I recommend thorough research and consultation with financial experts to ensure a smooth and successful home buying experience.

Remember, every homebuyer's situation is unique. Tailor your approach to align with your financial goals, and don't hesitate to seek guidance from trusted professionals throughout the process. By understanding and planning for these financial elements, you'll be well-prepared to unlock the door to your dream home.



bottom of page