How Much is a Down Payment on a Condo?

Minimum Down Payment Requirements BC

The minimum amount of down payment that you will need to purchase a condo in British Columbia (BC) depends on the purchase price of the property. The breakdowns for each price category is as follows:

For homes with a purchase price equal to or less than $500,000:

The minimum down payment is 5%.

For homes with a purchase price from $500,000 to $1,500,000:

The minimum down payment is a sliding scale calculation as follows:

• 5% on portion up to $500,000,
• 10% on the remaining balance of the purchase price (portion of the price above $500,000).

For homes with a purchase price equal to or greater than $1,500,000:

The minimum down payment is 20% on the TOTAL purchase price.
There is no sliding scale amount for homes $1.5M and above.

If you are purchasing the property as an investment property:

The minimum down payment for investment properties is 20%, regardless of the purchase price amount.

An example of minimum down payment on a condo

Keep in mind that these examples are for QUALIFYING properties only, and must be used as your primary residence (non-investment). A minimum 20% down payment is required for all investment properties.

Example 1 – amount below $500K (5%):

Purchase price:
$480,000

Minimum down payment calculation:
5% of $480,000 = $24,000

Minimum down payment total:
$24,000

Example 2 – amount below $1.5M (5% on 1st $500K, 10% on the remaining balance):

Purchase price:
$1,100,000

Minimum down payment calculation:
5% of $500,000 = $25,000
10% of $600,000 remaining balance ($1,1M – $500K) = $60,000

Minimum down payment total:
$25,000 + $60,000 = $85,000 total down payment

Example 3 – amount above $1.5M (20%):

Purchase price:
$1,700,000

Minimum down payment calculation:
20% of $1,700,000 = $340,000

Minimum down payment total:
$340,000

How down payment affects your mortgage

—

Putting less than twenty percent down payment means that you’ll have to get an insured mortgage

If you put less than 20% down, then you are considered to be a high-ratio mortgage, and must be insured by a mortgage insurer such as CMHC, Genworth, or others.

Mortgage default insurance is there to protect the lender in case you’re not able to make your mortgage payments, as the less down payment you put the riskier of a borrower you are perceived to be.

How much is the mortgage insurance premium

The amount of this premium depends on the amount that you are borrowing, as it works on a sliding scale. This means that the amount will be more if you put less down.

Usually, mortgage default insurance premiums can be paid at the time of purchase, or added to your mortgage and paid monthly.

How does the mortgage default insurance benefit me?

You do not personally receive any benefit for paying this insurance other than being approved to obtain a low-down payment mortgage.

What properties qualify for an insured mortgage?

In order to get an insured mortgage, the main requirements are that the property must:

• be used as your primary residence
• be under a purchase price of $1,500,000

Therefore, mortgage loan insurance is not available if the purchase price of the home is equal to or greater than $1,500,000 or if the property is being used for investment purposes.

Keep in mind that putting less than 20% down means that the insurer will also have to approve the financing application, and they may have additional requirements for you or the property’s documentation that must be approved in order for you to obtain  financing.

How much should I put down for a condo?

At the end of the day, you should put down what you are comfortable with and what works within your affordability and needs. You’ll need to meet the minimum down payment requirements, but anything after that is up to you.

While a larger down payment will mean a smaller mortgage payment and less insurance premium, we’ve seen a number of buyers try their hardest to save up 20% down only to be priced out of the market by the time they have saved all that money up.

If the market is moving faster than your ability to save a large down payment, then you may want to get in sooner rather than later and bite the bullet on the insurance premium.

—

If you’re looking to purchase a property in the Greater Vancouver area and are looking for a realtor to help represent you then reach out to us!

Start a conversation with a local realtor by calling or texting 604-319-0200 or email [email protected]. We’re here to help get your home buying journey started!