NerdWallet report reveals regional gaps in homeownership entry costs
Down payment requirements for home purchases continue to stretch Canadian budgets, with some provinces requiring over $70,000 just to get a foot in the door of homeownership.
The average Canadian homebuyer would need to save between $16,000 and $75,000 for a minimum down payment, depending on the province, according to NerdWallet’s latest Monthly Down Payment Monitor.
“When mortgage rates are high, it can be easy to forget just how important a down payment is to home-buying success,” NerdWallet mortgage expert Clayt Jarvis wrote in the analysis. “Even during the COVID era, when rates were at historic lows, you would have been left out of the feeding frenzy if your down payment savings fell short of the required minimums.”
NerdWallet’s analysis is based on compiled data from provincial real estate associations in June.
British Columbia topped the list with the highest average down payment requirement at $74,815. Prospective buyers also face some of the highest home prices, with the average sale price in the province reaching $998,159.
Ontario, another expensive housing market, had an average home price of $884,761. The minimum down payment required there is $63,476, which, while lower than in B.C., still represents a substantial financial commitment for many buyers.
Quebec offered a slightly more affordable option with an average home price of $506,224, with a minimum down payment of $25,622. Similarly, in Alberta, where the average home costs $509,938, buyers need to save $25,994 for a down payment.
Read next: Tough times ahead for Canadian home prices, report warns
The report also highlighted how even in more affordable markets, down payments remain a significant hurdle. In Saskatchewan, where the average home price is $332,413, buyers still need to save $16,621 - equivalent to roughly 20% of the province’s median annual household income.
Newfoundland has the lowest down payment requirement in the country, with buyers needing $15,932 for an average home price of $318,631. New Brunswick and Nova Scotia are also relatively affordable, with down payment requirements of $16,465 and $23,038, respectively, based on average home prices of $329,307 and $460,753.
In Prince Edward Island (PEI), the average home sells for $379,098, and the minimum down payment is $18,955.
The rising cost-of-living, coupled with stagnant wages, has made it increasingly difficult for many Canadians to save for a down payment.
The report also noted that the minimum down payment required for a home purchase is just one factor to consider. Other costs, such as property taxes, insurance, and maintenance, can also add up quickly.
“Once you have an idea of how much you’ll need to put down, you can build a savings strategy around that target amount. Expect a long, slow process, but every dollar you put away literally gets you closer to owning your own home,” Jarvis said.
Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.
