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Cracking the Code: A Deep Dive into Canadian Homeownership - Your Ultimate Guide

  • sasha540
  • May 11
  • 7 min read


Hey everyone, today we're tackling a topic that hits close to home for many Canadians—how to start homeownership. Specifically, we're delving into down payments, housing prices, co-ownership, and the path to selling your home (when needed). So, if you're dreaming of that front porch or that backyard BBQ, stay tuned because we're about to break it all down.



Home Buyers: What If You Can't Make a 20% Down Payment?


Let's start with the big question on everyone's mind – the down payment. Traditionally, you've heard that you need to cough up a hefty 20% down payment to get your foot in the door of the housing market. But what if you can't? Is homeownership forever out of reach? Fortunately, no, and let me show you how!


What Is the Minimum Down Payment for a Home?


Good news, the minimum down payment for a home in Canada doesn't have to be a whopping 20%. It's more like a foot in the door than a full-on leap. In Canada, you can put down as little as 5% of the purchase price on a home. So, if you're eyeing that $500,000 starter home, you'd need a minimum down payment of $25,000. It's still not pocket change, but it's far more manageable than 20%.


What If Your Down Payment Is Below 20%?


Here's the kicker – if your down payment is below 20%, you'll need to get mortgage default insurance. It's like a safety net for the banks, ensuring they won't take a massive hit if you can't pay.

This insurance adds a bit to your costs, but it can get you into the housing market sooner rather than later. For most people looking to own a home long-term, the additional cost of mortgage insurance is peanuts compared to what you can make in your home’s appreciation. Let’s say you buy a home for $500k a year sooner by taking advantage of a lower down payment. If your home appreciates by 7% in the next year, you’ve saved yourself an additional $35k you would have had to pay a year later. Not only that, but now you’ve just accrued $35k in equity on your minimum $25k down payment! So, don't let that 20% figure scare you off – 5% can get you started.


What If You need a Bigger Home?


Granted, a budget of $500k won't fit the bill for everyone in every city. In fact, in bigger cities like Toronto or Vancouver, it can be next to impossible to buy a home for most people, unless you already own property you can sell, or you have help from your family. However, in most parts of Canada, there's still a path forward for those needing a larger home and a larger budget. With the new rules brought in by the federal government, CMHC insurance will now allow you to borrow up to $1.5 million with less than 20% down. That's right above $500k, home buyers now only need to pay a minimum of 10% down on the remaining balance. That means, if you're eyeing up a $900k home, your bare minimum down payment could be as little as $65k ($25k + $40k). And with the new rules, you can now get by with a smaller down payment on homes over $1M but within $1.5M. Therefore, your minimum down payment on a home costing $1.2M could be $95k ($25k + $70k). Although this isn't a small amount, it's still a big savings compared to the 20% that would have been required before. At $1.2M, the previously required 20% down meant that buyers had to come up with a massive $240k down payment!


Should You Wait for Housing Prices to Go Down?


Let's address the elephant in the room – those skyrocketing housing prices. Many folks wonder if they should wait for the market to cool down before taking the plunge. It's like trying to time the stock market – nearly impossible.


Housing markets can be like a rollercoaster, full of twists and turns. While it's true that prices have been on the rise, no one can predict when or if there will be a significant correction.

You might be priced out of the market if you wait too long. It's like waiting for the perfect wave when surfing – you might miss a great ride if you’re too picky waiting for the perfect opportunity. However, here is where waiting can make a lot of sense. If you are within 6 months of a major promotion, or a family gift that will put you in an entirely different purchasing situation, then it can make a lot of sense to hold off. Let's say you can afford a condo now, but in 6 months you'll be able to afford a detached home, the home you really want. In that case, it usually makes more sense to wait 6 months rather than buy a condo now, then have to sell and buy again in a few years time.


How Does Co-Ownership Work?


When it comes to co-ownership, you have a few different options. One is to go in on a purchase with a friend or family member. Maybe your household income and current savings alone won’t cut it. However, if you and your best friend or cousin can do it together, that may be a significant step to home ownership. You could buy something together now, then when you go to sell in the future, you'll both have a sizeable downpayment to buy your own homes.


Alternatively, your parents or favourite Aunt can help you enter the market sooner. A common approach is to get some help in the form of a gift from your parents to top up your down payment. However, this isn’t always enough. Sometimes you need someone to co-sign for you so you can get the financing you need, and this may require adding that friend or family member to the title of your property.


Finally, let's talk about a potential solution for when none of these other options will work.. In this case co-ownership with platforms like Ourboro can be a game-changer.


Ourboro is like the matchmaker for co-ownership. They connect like-minded individuals who want to buy a home together. It's like having a real estate buddy to share the journey and the expenses.

Imagine you find a co-owner who shares your vision and your financial situation. Together, you put down the down payment, split the mortgage, and share the joys (and responsibilities) of homeownership. It's like building a team to conquer a mountain – it makes the climb less daunting. Naturally, you will also be splitting the equity of that property when you go to sell, but that may be a huge leg up from being forever shut out of the market.


What If You Want to Sell Your Home?


Now, let's fast forward a bit. You've bought your dream home independently or with a co-owner, and life has thrown you a curveball. You may be moving for work, or your family is growing and needs a bigger space. What do you do?


Selling your home is like passing the baton in a relay race. It's a process, but it doesn't have to be overwhelming. Here are the key steps:


Assess Your Home's Value:


Get an idea of what your home is worth in the current market. This will allow you to plan ahead based on what's really possible rather than simply guessing.


Hire a Realtor:


A real estate agent can be your MVP in the home-selling game. They'll market your home, find potential buyers, and guide you through the process with expert advice and assistance.


Prepare Your Home:


This is like getting your car detailed before selling it. Clean, declutter, and make any necessary repairs to make your home shine. No one wants to buy a beat-up Pinto or a rusted-out Chevy. Taking time to prepare and stage your home sets the stage for an attractive home that buyers will pay top dollar for.


Set the Price:


Work with your realtor to set a competitive price to attract buyers. Price your home too low, and you may be leaving money on the table unless, of course, you’re in a scorching hot market. Price your home too high, and it may be sitting there for ages, and you might also be leaving money on the table!


Market Your Home:


Your realtor will list your home on MLS, social media, and other platforms to reach potential buyers. This is where you spread the word on your big home sale event. With the proper marketing, you should aim to attract buyers from far and wide.


Negotiate Offers:


When offers come in, your realtor will help you negotiate the best deal. It's like haggling at a flea market – you want to get the best price and you don’t want a good opportunity to slip through your fingers.


Close the Deal:


Once you've accepted an offer, it's time to finalize the sale. It involves paperwork, inspections, and more. It's like crossing the finish line in that relay race.

Selling your home can be a bit like a marathon – it takes time and effort, but with the proper guidance, you can win.


The Bottom Line


Homeownership can be something other than an attainable dream in Canadian real estate. You don't need a 20% down payment and don't have to wait for housing prices to drop magically.

If you don’t have enough money or a high enough income to buy on your own, consider getting help from family, or going in on a property with a good friend. Platforms like Ouroboros can also help you find the perfect co-owner, making homeownership a reality. And when it comes time to sell, a good realtor can guide you through the process.

Remember, the Canadian real estate market is like a complex puzzle. But with the right pieces and expert guidance, you can unlock the door to homeownership and create a place to call your own.


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I am a Victoria-based local realtor with eXp Realty. My commitment to honesty, integrity, loyalty, and hard work have been essential pillars for me because they drive a high standard of excellent service for my clients. Helping you realize your dream is my goal!


I service Vancouver Island, but my focus is on Victoria, Sooke, Saanich, Malahat, Shawnigan Lake, Cobble Hill, Duncan, and the rest of the Cowichan Valley.



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