If possible, try to get 10% down. With 5% down, your downpayment is almost entirely insurance expense, throw in 5% realtor fees and other costs for selling, and well, it might very well take 3+ years before you can sell your place and not expect to lose money compared to just renting a place with nearly the same monthly cost. On a $300k purchase, the difference in CMHC fees between 5-10% down is about $4,500.00
Some tricks to boosting your downpayment and mortgageablity:
- If you have less than 20k in your RRSP, contribute the missing amount ASAP. You will be able to withdraw it, under the HBP, after 90 days (Make sure your possession date is later than 90 days away from whenever the money went in). Consider even taking out an RRSP loan to achieve this. You will have to repay the loan before getting the mortgage, but depending on your income, you might be able to coax 3 to 7 thousand dollars of extra tax savings that can be put down on a place.
- Plan to sell your car if you have a car loan. Add the money to your downpayment, and then rebuy a cheaper car or get dealer financing after you get your mortgage. It is easier to get a car loan with a large mortgage, than it is to get a large mortgage with a car loan.
- See if your realtor knows any tricks for coaxing downpayment cash out of a deal. Rather than reducing their price, the seller may agree to provide a "cash-for-repairs" allowance. Write it into the offer, and they can forward this amount to your lawyer, and it gets added to your downpayment. Many sellers probably won't go for this, and it may not even be strictly legal, but i've heard of stuff like this happening, and it's worth a shot.
Also, I really like the following website for doing home purchase analysis:
http://www.canadamortgage.com/
They have a series of mortgage calculators (see drop down on top right side of screen). The "Finance your purchase" calculator will give you a good estimate as to how much money the banks will lend you. Also the rate they show as "their best rate", is a pretty good indicator of the interest rate you should expect to get for your mortgage if you shop around.
The rent vs own calculator is a real eye opener. It takes interest and ownership vs rent expenses and tells you how much your house has to increase in value in order for ownership to be a financially more viable option then renting.