What to know
- A new Zoocasa report found seven Canadian cities where buyers can make a 20 per cent down payment on a detached home with less than $200,000 saved.
- The most affordable markets include Winnipeg ($95,463), Edmonton ($120,949) and Montreal ($129,000), followed by Ottawa, Calgary, Hamilton and Mississauga.
- Buyers who can put down 20 per cent avoid paying CMHC mortgage insurance premiums, reducing their monthly housing costs.
- In contrast, detached home buyers need significantly larger down payments in some major markets, including Toronto ($322,198), Vancouver ($369,580) and Brampton ($204,627).
Real estate prices are still steep in some parts of Canada, but a new report is suggesting that it’s still possible to get a detached home in the country with a down payment of less than $200,000.
The Canadian housing markets vary significantly from some regions to others, where a home in some major cities, such as Toronto or Vancouver, can cost significantly more than in other parts of the country.
Although there are a series of advantages to living in a major city, from the abundance of events and entertainment to transit availability, a new Zoocasa report is suggesting that buyers can find a much better value by stepping into other markets.
How does the mortgage gap occur?
According to Zoocasa, the affordability gap between certain major cities and other regions of the country reaches about $1.4 million in some parts of the country, and impacts whether locals can qualify for a mortgage and afford their monthly payments.
Canada’s mortgage rules further increase the gap. If a home costs less than $1.5 million, buyers are only required to provide a five per cent down payment on the first $500,000 and 10 per cent on the remaining value. Meanwhile, for homes over that price, buyers need to pay 20 per cent upfront, which is at least $300,000.
Those who are unable to provide a 20 per cent payment are required to get an insurance policy from the Canadian Mortgage and Housing Corporation (CMHC), which comes with costs added to the monthly mortgage payments.
Where can Canadians get a down payment for less than $200K?
Under the current prices and mortgage rules, buyers with less than $200,000 saved are essentially priced out of the detached home market in Toronto, Vancouver and Brampton, where a down payment is often beyond $300,000.
However, according to Zoocasa’s report, buyers are still able to find opportunities for under $200,000 in certain markers across the city, while still avoiding CMHC insurance premiums.
The report suggests that buyers should target reaching a 20 per cent down payment, which keeps them from being forced to take on mortgage insurance, and in turn saves them from added monthly costs.
Based on the current average home prices, buyers are able to achieve a 20 per cent down payment in certain cities for less than $200,000, including:
- Winnipeg, Man. for $95,463
- Edmonton, Alta. for $120,949
- Montreal, Que. for $129,000
- Ottawa, Ont. for $144,254
- Calgary, Alta. for $149,560
- Hamilton, Ont. for $172,181
- Mississauga, Ont. for $194,209
Meanwhile, buyers in Toronto face an upfront cost of $322,198, while in Vancouver the cost reaches $369,580 and in Brampton $204,627.
