Down Payment & Closing Costs

Examples: $400,000 home = $20,000 down (5%). $700,000 home = $45,000 down (5% of $500K + 10% of $200K). $1,600,000 home = $320,000 down (20%). With less than 20% down, CMHC mortgage default insurance is required, adding 2.8%–4.0% to your mortgage balance.

A broker should run both scenarios: 19.99% down with insurance vs 20% down without. The insurance premium is 2.80% of the mortgage on 15–19.99% down — but the rate could be 0.10–0.20% lower. Over 5 years, the lower rate might save you more than the insurance costs. Don't assume 20% down is automatically better without seeing both sets of numbers.

The gift letter must state: amount, donor's relationship to you, that no repayment is expected, and the donor's signature. Your broker provides the template. Some lenders want the funds deposited 15–30 days before closing. A few lenders also accept gifts from aunts, uncles, or close family friends — but this is lender-specific. Gifts from non-family are rarely accepted by A-lenders.

Borrowed down payments are more common with uninsured mortgages (20%+ down). For insured mortgages (under 20%), at least 5% must come from your own resources — traditional savings, RRSP/FHSA, or a gift. A line of credit top-up above the minimum is usually fine. The lender will count the borrowed payment against your debt ratios regardless.

Typical Alberta closing costs: legal fees and disbursements ($1,200–$2,000), land title registration ($200–$400), title insurance ($250–$400), home inspection ($400–$600), property tax adjustment (prorated from seller — varies), moving costs ($500–$3,000), utility hookups and deposits ($200–$500), and immediate home expenses (locks changed, minor repairs). CMHC insurance is added to your mortgage, not paid at closing.

Alberta does charge a modest land title transfer fee — approximately $200–$400 depending on the property value. This is a fraction of what other provinces charge. If you're moving from BC or Ontario, this savings alone can cover a significant portion of your other closing costs. It's one of the reasons Alberta is attracting so many interprovincial buyers.

These are paid through your lawyer at closing and are included in the legal fee disbursements. Compared to land transfer taxes in other provinces ($6,000–$20,000+), Alberta's registration fees are negligible. Your lawyer handles the registration and includes these in their closing cost breakdown.

Your lawyer's job: review the Real Property Report (RPR) and compliance, search the land title for liens or encumbrances, prepare and register all documents, hold funds in trust, and coordinate the closing with the seller's lawyer and lender. Your broker can recommend experienced real estate lawyers who handle closings efficiently.

For purchases in standard urban areas with reasonable loan-to-value ratios, many lenders use desktop or automated valuations at no cost. Physical appraisals are more common for: rural properties, acreages, higher-value homes, tight LTV situations, or refinances. If an appraisal IS needed and the lender won't cover it, your broker can often find an alternative lender that will.

A standard inspection covers structure, roof, foundation, electrical, plumbing, HVAC, insulation, grading, and visible defects. For additional concerns, you may want: radon testing ($150–$250), sewer scope ($200–$350), well water testing ($100–$200 in rural areas), or mould testing. Your realtor can recommend inspectors. In competitive markets, some buyers waive inspections — Shawn strongly advises against this.

If you're short on closing cost funds, options include: a cash-back mortgage (lender gives you 1–5% upfront at a higher rate), a family gift specifically for closing costs, a personal line of credit, or negotiating seller concessions (asking the seller to cover some costs as part of the deal). Your broker can help structure a solution if closing costs are the bottleneck.

Counterintuitively, a 19.99% down payment sometimes gets you a BETTER rate than 20% down — because the insured mortgage is less risky for the lender. At 35%+ down, you unlock some of the best uninsured products. At 50%+, some lenders offer "equity lending" products that are less strict on income verification. The right down payment amount depends on your full financial picture, not just a percentage target.

Lenders want to see that you're not scraping the bottom of the barrel. Having zero savings after closing is a red flag. Some lenders explicitly require proof of reserves beyond the down payment and closing costs. Even if your lender doesn't require it, having a buffer protects you from the unexpected — furnace breaks, water heater dies, unexpected repair within the first year.

These programs stack — you can use ALL of them on the same purchase. The FHSA alone is the most powerful savings tool in Canada (tax-deductible going in, tax-free coming out, no repayment). If you haven't opened one yet, do it today — even with $1. It starts the clock on contribution room.

Example: The seller paid $4,000 in property tax for the full year. You close on July 1 (halfway through the year). You owe the seller $2,000 for the remaining 6 months they've already covered. This is not an additional tax — it's a reimbursement to ensure each party pays their fair share. Your lawyer handles the calculation automatically. Budget roughly 25% of the annual tax bill as a closing cost estimate for the adjustment.