Types of Mortgage determined by the down payment amount

Conventional Mortgage

• A down payment of 20% or more.

High Ratio Mortgage

• A down payment of less than 20%.Must be insured against default through CMHC, Genworth Financial or AIG.

Possible Sources of Down Payment

Your own savings or investments

• Usually lenders need to see a minimum of 3 months history of the savings via bank account(s) statements or investment account statements

Home Buyer's Plan

• Borrowers are allowed to withdraw up to $25,000 each from their RRSP account within something called a Home Buyers Plan. In that case the funds taken out of the RRSP will NOT be taxable and the borrower has 15 years to put that amount back into the RRSP (1/15th of the whole amount every year).

Gifts from parents, siblings or grandparents

• This is not allowed if a borrower is self-employed and must qualify for the mortgage under something called a Stated Income Program, where full income verification is not required.

Equity in the existing property

• Down payment can come from the sale of this property or, if the property is not being sold, the down payment can be borrowed against that equity.