Many Markham residents, particularly first-time homebuyers, are finding it difficult to purchase a home. While the recommended down payment is 20% of the home’s purchase price, you may find yourself paying more than $160,000 for a down payment on a house that costs approximately $800,000 in the Markham area. Unfortunately, does not include the closing costs and other expenses that come with purchasing a home.
How Much Do You Actually Need to Buy a Home in Markham?
Sadly, there is no one standard answer to this question. There are several factors that will determine how much money you need to save to purchase a home in Markham. These include:
The neighbourhood you choose to live in will play a role in the amount of money you must save. Some neighbourhoods will cost more than others, meaning you must have a larger down payment. It may also have a different minimum requirement set by the Bank Of Canada.
For example, if you are considering a property that costs less than $500,000, your minimum down payment is 5%. If the home costs between $500,000 and $1 million, the down payment is 5% of the first $500,000 and 10% of the remaining balance. If you want to purchase a home greater than $1 million, you must save a minimum of 20% of the home’s purchase price.
Closing costs will also greatly affect how much money you need to save. On average, you can expect to pay between 2% to 5% of the home’s purchase price in closing fees. You should add this amount of money to your down payment. In some situations, you can choose to incorporate these closing costs into your monthly mortgage payment and you may negotiate with the seller to pay a portion of these closing costs as well.
If You Qualify for Assistance Programs
As you work to reach your financial goal, the market will keep appreciating and you may find yourself far away from your goal despite a growing savings account. Luckily, there are various programs and incentives, such as The First Time Home Buyer’s Incentive, which make it easier for buyers to purchase a home.
The First Time Home Buyer’s Incentive, for example, provides down payment assistance to help you provide a larger down payment and lower your monthly mortgage payment. However, to qualify for these programs, you must meet strict guidelines.
If you are ready to purchase a home in the Markham area, contact real estate agent Martin MacFarlane today. He can help you begin your search in the Markham area.