Home Purchase Cost Calculator — Down Payment & CMHC

The minimum is 5% of the first $500,000, 10% of the portion between $500,000 and $1.5 million, and 20% on any purchase above $1.5 million. On an $800,000 home that works out to $25,000 plus $30,000, or $55,000.

Anything under 20% requires mortgage default insurance from CMHC, Sagen or Canada Guaranty. The premium is a percentage of the mortgage that scales with your loan-to-value, and it is normally added to the mortgage rather than paid up front. The provincial sales tax on the premium, however, is always due in cash at closing in BC, Ontario, Quebec, Saskatchewan and Manitoba.

Land transfer tax is the largest single item in most provinces and the one most likely to be underestimated. Beyond that, a handful of smaller costs add up quickly.

• Legal fees and disbursements — typically $1,200 to $2,500
• Title insurance — usually $250 to $500
• Home inspection — $400 to $800
• Appraisal — $300 to $600, sometimes covered by the lender
• Property tax and utility adjustments reimbursing the seller for prepaid amounts
• GST on new construction, at 5% of the purchase price with a partial rebate below $450,000
• Moving costs, immediate repairs, and setting up utilities

The Home Buyers' Plan lets each first-time buyer withdraw up to $60,000 from an RRSP tax-free, repaid over 15 years starting five years after the withdrawal. The First Home Savings Account allows $8,000 a year up to $40,000, deductible going in and tax-free coming out, and it can be combined with the HBP.

The First-Time Home Buyers' Tax Credit is worth up to $1,500 at tax time. Provincially, BC's first-time buyer exemption removes property transfer tax entirely below $500,000 with partial relief to $835,000, and Ontario refunds up to $4,000 of land transfer tax with a further $4,475 in Toronto.

Lenders require a 90-day history for every dollar of the down payment. Bank statements, investment statements, and a clean paper trail for any transfer between accounts are standard. Large unexplained deposits will hold up an approval.

Gifted funds are acceptable from an immediate family member with a signed gift letter confirming the money does not have to be repaid. Borrowed down payments are possible with some lenders, but the loan payment counts against your ratios and the rate is usually higher.

Canada uses a tiered minimum. On a $400,000 home you need $20,000 (5%). On a $700,000 home you need $25,000 on the first $500,000 plus $20,000 on the next $200,000, for $45,000 total — 6.4%, not 5%. At $1.5 million and above, 20% is mandatory and no insurance is available.

If your down payment is under 20%, the lender requires default insurance from CMHC, Sagen, or Canada Guaranty. It protects the lender, not you, but it is what allows a 5% down purchase to exist at competitive rates.

The premium is a percentage of the loan amount, set by loan-to-value: 4.00% at 95% LTV, 3.10% at 90%, 2.80% at 85%, and 2.40% at 80%. On a $475,000 loan at 95% LTV the premium is $19,000, added to the mortgage balance and amortized over the life of the loan.

Insured mortgages usually carry lower interest rates than uninsured ones, because the lender's risk is covered. That partly offsets the premium — one reason 20% down is not automatically the cheaper choice.

Lenders require proof you have roughly 1.5% of the purchase price available beyond the down payment.

• Land transfer tax — the biggest item in BC and Ontario, zero in Alberta.
• Legal or notary fees — typically $1,200 to $2,500 including disbursements.
• Title insurance — usually $250 to $500.
• Home inspection — $400 to $800.
• Appraisal — $350 to $600 where the lender requires one.
• PST on the CMHC premium in BC, Ontario, Quebec and Saskatchewan.
• Property tax and utility adjustments reimbursing the seller for prepaid amounts.