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  • Sylvia Ho

Purchasing a 2nd Property with 5% Down Payment

Can I buy a second home with 5% down payment? The answer is yes and no. Below are three points that decide whether you are able to purchase a property with 5% down payment.


What is down payment? Down payment is the amount of money that you have in your bank account to purchase a property. The minimum down payment in Canada is 5% for purchase prices UNDER $500k. So, the min. cash that you need is $25,000.But if your purchase price is above $500k, the min. down payment is 10%. THEN… every dollar of the purchase price above $500k, you will require 10% down payment.I.e. your purchase price is $650k. You will have to come up with $25k for the first $500k and then 10% of the next $150k…. so, total down payment is $25k + $15k.

Purchase price of your home

Minimum amount of down payment

$500,000 to $999,999

5% of the purchase price

Above $500,000

10% for the portion of the purchase price above $500,000

$1 million or more

20% of the purchase price

What is the difference between down payment and deposit on offer?


Deposit on Offer: The deposit money is what you will need in advance to put in your offer. You will need to have this amount ready in your bank account and produce a certified cheque to your realtor. Typically, this amount is 5% of the purchase price.


Point #1: Home must be owner occupied

The reason for your purchase will be the deciding factor on whether you can purchase a property with a 5% down payment. Many people think that only first-time home buyers are allowed to do this. However, this is not the case. Many of my clients purchase second and third properties at 5% because the purchase purpose is ‘owner occupied’. The key is being owner occupied.


Point #2: Home for your kids

Another scenario where you can buy a place at 5% down payment is by buying a property for your kids to live in. In many instances, this occurs when the child is going to secondary school and instead of renting, the parents purchase a home for the child to live in. In this case, the purpose of the purchase is secondary home. I have had clients buy a secondary home for their child and then to “cover” the costs of this second home, the child can have some of their friends live with them as well.


Point #3: Home for your parents

You have the opportunity to purchase a place at 5% down payment should your parents decide to occupy it. In this scenario, your parents would move into the new place, for example, a condo and their previous property would be rented out.


There are so many different strategies when it comes to the 5% down payment program. Reach out to chat by booking an appointment at www.sylviaho.ca.

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