What is the minimum down payment required for a $600,000 home purchase in Canada?

Q: What is the correct answer to: What is the minimum down payment required for a $600,000 home purchase in Canada?

The correct answer is $45,000. Option D ($45,000) is correct based on Canada's tiered minimum down payment structure. For a $600,000 home: 5% on the first $500,000 equals $25,000, plus 10% on the remaining $100,000 equals $10,000, totaling $45,000. This calculation follows federal mortgage regulations that apply to all federally regulated lenders and is enforced through CMHC and other mortgage insurers' requirements.

Q: What background knowledge is needed for this Mortgage & Real Estate Finance question?

Canada's minimum down payment requirements are federally regulated and apply to all insured mortgages. The tiered structure is: 5% on the first $500,000, 10% on amounts from $500,001 to $999,999, and 20% on the entire purchase price for homes $1 million and above. These rules are enforced through mortgage default insurance requirements from CMHC, Genworth, and Canada Guaranty. The regulations aim to balance housing accessibility with financial prudence, ensuring borrowers have sufficient equity while preventing excessive leverage that could destabilize the housing market.

Q: What is a good way to remember the answer to this Mortgage & Real Estate Finance question?

Picture climbing a staircase where each step represents a down payment tier: Step 1 (up to $500K) = 5%, Step 2 ($500K-$999K) = 10%, Step 3 ($1M+) = 20%. The stairs get steeper as you climb higher, just like down payment requirements increase with home prices. When you see a purchase price, identify which 'steps' it touches. Calculate each step separately, then add them together. For any amount over $500K but under $1M, you'll always use both the first step (5%) and second step (10%).

Q: What exam tip applies to this Mortgage & Real Estate Finance question?

Always break down calculations above $500,000 into two parts: 5% of the first $500,000, then 10% of the remainder. Double-check your arithmetic as this is a common error point.

Q: How does this Mortgage & Real Estate Finance concept apply in real world practice?

A client wants to purchase a $650,000 townhouse in Mississauga. As their agent, you need to advise them on minimum down payment requirements for mortgage pre-approval. You calculate: $25,000 (5% of first $500,000) + $15,000 (10% of remaining $150,000) = $40,000 minimum down payment. This helps them understand their cash requirements and plan their financing strategy before making an offer.

Question

Mortgage & Real Estate FinanceDown Payment RequirementsONMEDIUM

What is the minimum down payment required for a $600,000 home purchase in Canada?

Answer Options

A

$30,000

B

$35,000

C

$40,000

D

$45,000