Understanding Down Payments, Closing Costs and More

Couple Meeting with Financial Advisor

When you are planning to buy your first home, having all of the information up front goes a long way towards making the process more enjoyable.

Here is a quick summary of some of the terms you will need to know before buying your first home.

Down Payment

In order to qualify for a mortgage in Canada, your must have funds to put towards a down payment, which must be a minimum of 5% of the purchase price of the home.

This means, if you are looking to purchase a home worth $250,000, you will need a minimum of $12,500 as your down payment.

If you want to avoid paying a High Ratio Mortgage Loan Insurance premium through CMHC, you will need to put down at least 20% of the purchase price as a down payment.  The CMHC insurance premium can be up to 4% of your mortgage balance with a traditional down payment, according to CMHC.

Don’t have your down payment saved yet? Cambrian has a number of savings account options that can help you get there faster. 

Closing Costs

Closing costs include land transfer tax, legal fees, property tax adjustment and a 30-day interest adjustment. If you do not have a 20% down payment, you will also be required to get CHMC mortgage insurance and retail sales tax on the insurance will be added to your closing costs.

We suggest that people budget for an additional 2% of the purchase price on top of your down payment to cover closing costs.


A pre-approved mortgage establishes your maximum purchase price based on your down payment, income, mortgage rate and term.  Getting pre-approved also means we will hold your mortgage rate for 120 days while you shop for your home, protecting you from rising interest rates.

Having a pre-approved mortgage helps establish you as a serious buyer and can make you more competitive when submitting your Offer to Purchase as you will have your financing already approved. 

Plus, bring your new mortgage to Cambrian and we will give you $500 cash.

Ready to start the process? Get pre-approved now.