Real Estate Term
Down Payment
The portion of the purchase price paid upfront by the buyer, typically expressed as a percentage.
What is Down Payment?
A down payment is the portion of a home's purchase price you pay upfront in cash, with the rest financed by a mortgage. In Canada the minimum ranges from 5% on lower-priced homes to 20% or more on higher-priced ones, and putting down less than 20% requires mortgage default insurance. A larger down payment reduces the amount you borrow, your interest costs, and can help you avoid insurance premiums.
Frequently asked questions
Related terms
EquityThe difference between a property's market value and the amount owed on the mortgage.AmortizationThe process of paying off a loan over time through regular payments that cover both principal and interest.Closing CostsFees and expenses paid at closing, including legal fees, land transfer tax, and other charges.DepositA sum of money paid as part of an offer to purchase, held in trust until closing.MortgageA loan used to purchase real estate, with the property serving as collateral.
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