The Down Payment is that part of the total home purchase price you will pay in “cash” – usually at least 20% of the purchase price.  

You don’t have to come up with all the funds until the date of closing – which can be several months in the future. That gives you time to arrange for withdrawals. 

You do have to provide a Deposit from your cash funds at the time your offer is accepted. The cash Deposit is, then, part of the Down Payment funds you have saved. The Deposit is credited against the total cost of the house at the time of closing.

Obviously, the more you’ve saved for your Down Payment the better!   A larger down payment: 
1.      Reduces the amount of your monthly principal and interest payment; and
2.      Reduces the total amount of interest you pay over the life of your mortgage.

Your Down Payment can come from a variety of sources.  If you’ve been putting money away for years, you might have a significant sum in a savings account or you may have savings bonds that have matured.

Likewise, other sources of income can come from life insurance dividends, a bonus from work or an income tax refund. It all adds up and can be used towards your down payment. Money you receive as a gift is eligible for your Down Payment provided it doesn’t have to be paid back. The person gifting the funds to you will be required to complete and sign a gift letter for your lender to verify.

Under theCanada Revenue Agency Home Buyers' Plan, individuals may withdraw up to $25,000 tax-free from their Registered Retirement Savings Plan to use towards the purchase of a new home. That means that you and your spouse or common-law partner together can withdraw up to $50,000 tax-free. Keep in mind that you will have to pay back your withdrawal in equal payments over 15 years beginning the second year after the withdrawal. 

                                Check out the CMHC Website for detailed information and worksheets