2. Determine What You Can Afford – Buying

Determining the type of home that you can afford to purchase involves figuring out how much money you have for your down payment plus the typical one-time expenses of buying a home, and how much a mortgage lender will lend to you.

Legally-regulated lenders require that the down payment be at least 5% of the purchase price of the property, up to a price of $500,000, then 10% for any amount above $500,000, then 20% for any amount above $1,000,000.

Note that if your total down payment is less than 20% of the purchase price, then you will probably be required to purchase mortgage loan insurance. The insurance premium will be rolled into your regular mortgage payments, so there is no up-front cash requirement for this premium.

To find out how much a mortgage lender will lend to you, speak with a mortgage representative about a mortgage pre-approval, either directly through a lender (such as a bank or credit union), or through a mortgage broker, who will shop around for the best mortgage for you.

I can recommend a mortgage representative to you. For recommendations to mortgage representatives, call or text me at 416-725-3544, or email miiakelly@royallepage.ca.

Go Back: Part 1. Find Out What’s Happening in the Market

Up Next: Part 3. Determine Your One-Time Expenses of Buying


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