Pop Quiz - What’s the Minimum Downpayment These Days?

With the changes made to the mortgage rules back in April, we are seeing a bit of confusion out there over the minimum downpayment needed when buying a home. In actuality, the minimum downpayment to purchase home that you will live in personally has not actually changed – it’s still 5% of the purchase price. This applies not only to first time buyers but to anybody purchasing a personal residence or a second home that will be occupied, rent free, by a family member.

The major change in the rules regarding downpayment applied only to purchases of Rental Properties. The required downpayment has increased to 20% of the purchase price making the purchase of revenue properties a little out of reach for the average person. And that’s the idea. The lenders feel that in this market, rentals are pretty risky ventures and they don’t really want to invest in many more of them at this time. The larger downpayment requirement was set to discourage further investment in rentals and to ensure that those customers that are buying them are investing pretty heavily themselves, lessening the risk to the lender.

Now, in addition to the 5% downpayment on a personal residence,  the lenders will require you to have another 1.5% of the purchase price set aside for what is called closing costs. Lenders want to make sure you that have enough funds to pay the lawyer’s fees and property taxes associated with the purchase of you house aswell as money to turn the heat and lights on. It’s actually part of your contract with the lender to be current with your property taxes and your heat payments, so they make sure from the get go that you have the funds to set up these accounts. In most cases, lender will require you to prove that you have the 1.5% “closing costs” in a bank account and typically, these particular funds cannot be gifted to you or borrowed.

At First Foundation Residential Mortgages, we specialize in assisting First Time Home Buyers in the Edmonton and Calgary areas, through the mortgage process. Please contact one of or Mortgage Brokers with any questions you may have – every question is a good one and we want to make sure our clients feel well educated and secure even when buying their first home!


As the company’s first employee, Jennifer has been a Licensed Mortgage Associate since 2004, but her current role is not focused on mortgages. She is the resident blog writer and…

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