What are Some Examples of Down Payment Sources?
Let’s break down a few common sources of down payment.
- Savings – This strategy often takes the longest to accumulate.
- Gift – When buying an owner occupied home, you can secure financing with a gift from an immediate family member
- RRSP’s / TFSA’s – These tax-sheltered accounts are among some of the most popular accounts used as down payment sources today.
- Investment Accounts – Like RRSP’s & TFSA’s, additional investment accounts are great options to utilize for your next down payment.
- HELOC – A home equity line of credit is a common source that many homeowners utilize to invest in real estate. In this case, the interest paid is tax deductible.
- Equity – When done right, homeowners can leverage their built-up equity for the purpose of buying assets like real estate.
- Joint Venture – A JV partnership works great when one party has the down payment, and the other party has the credit and income to help qualify.
- Turn your primary into the rental - This strategy works well for those homeowners who want a rental property but have less than 20% down. Remember an owner-occupied purchase only requires 5% down.