Mortgage Down Payment Sources.

Mortgage Down Payment Sources

A down payment is the amount that you apply towards the purchase of a property. The down payment is the difference between the purchase price and your mortgage amount. Depending on your income and credit profile, you might be apply to apply a down payment as little at 5%. Otherwise, you will need to apply a minimum down payment of 20%, and in some cases, 35%. Keep in mind that if you are purchasing property with a downpayment between 5% and 19.99%, you are responsible for the default insurance premium. If the purchase price is $1,000,000 or greater, or your income and credit profile does not conform to the mortgage insurers guidelines, you will not qualify for mortgage default insurance. This means that if you were planning on applying a down payment between 5% – 19.99%, thank again. As illustrated above, the difference between a 5% down payment and a 20% down payment on a $500,000 property is $75,000. This might be troublesome. 

We ask you to also keep in mind that there is a sliding scale for insured mortgage down payments. You must apply 5% of the first $500,000 of value, and 10% of the value over $500,000. This means that your required down payment for a $750,000 purchase price is $50,000.

What’s the Source?  

You must provide evidence to your mortgage lender that verifies the source of your down payment. Your mortgage lender wants to verify that your down payment isn’t being borrowed and that you are using your own true funds. 

• Bank Statements (Personal savings, or verifying the transfer from your business account)
• Investment Statements (If you are cashing-in investments)
• Purchase & Sale Agreement w/ Statement of Adjustments  (If you are using sale proceeds)
• Purchase & Sale Agreement w/ proof of deposits (If you are purchasing a pre-construction property)
• Transaction Documents (If you have sold an asset)
• Gift Letter (If you are receiving a non-repayable gift)
• Will or Solicitors Letter (Inheritance)
• Mortgage Statement (If you are using a line of credit)