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You are here: Home > Personal > Goals and life events > Owning your home > Buying a second home > Evaluate your financial capacity

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Buying a second home

Evaluate your financial capacity

Before buying a second home, you need to determine your financial capacity.

Before buying a second home, a future homeowner must supply part of the necessary funds. This money will be used:

  • as a down payment for buying a second home
  • to cover start-up costs
  • to pay expenses for the first year

Down payment

A down payment is applied directly to the sale price of your house. The larger the down payment, the less you will have to borrow and the more you will save in interest.

The money for the down payment and the other fees will come from 2 main sources:

  • savings
  • equity in your principal residence

1. Savings

How much money have you saved until now?

To find out, make a simple balance sheet of your personal savings or of your savings as a couple. Mainly, check the balances in your savings accounts.

If you haven't saved up enough to fulfill your dream, Desjardins has the solutions you need to increase your savings and down payment.

2. Equity in your principal residence

Part of the equity you have in your home can be used as the down payment for your second home.

Calculating the eligible amount is simple: 80% of the market value of your principal residence less the mortgage balance.

Your principal residence will serve as mortgage security for the mortgage on your second property and the eligible amount will be deducted from the required down payment.

Down payment for a second home

The minimum down payment for a second home is usually 5% of the purchase price but it may vary in certain situations.

If your down payment is between 5%1 and 20% of the purchase price (or of the market value of the property, if less than the purchase price), you'll have to take out mortgage insurance with:

Read the CMHC document about insurance for a second home (PDF, 620 KB)

Read the Vacation/Secondary Homes Program on the Genworth Financial Canada website.

If your down payment is 20% or more of the purchase price (or of the market value of the property, if less than the purchase price), you won't need to take out mortgage insurance.

Before applying for a mortgage on a second home, it's important to carefully evaluate you capacity to pay so you'll know the most you can afford to spend on a second home.

Use the How much can I afford to spend on a home? tool to estimate the amount.

If you were to die, could your loved ones continue to pay the mortgage?

What if you were disabled? Would you need to dip into your savings for lack of income?

Even if you have salary insurance, is it enough?

For all these questions, there is an answer: Desjardins loan insurance.

This insurance is ideal to protect your capacity meet your financial obligations related to your loans in the event of disability or death. It includes:

  • life insurance to pay off the balance of your mortgage in the event of your death
  • disability insurance to replace your regular payments to the caisse for you while you are disabled

Learn more - Loan Insurance

  1. For homes priced higher than $500,000, the minimum down payment for insured mortages is 10% for the portion of the home price that exceeds $500,000, and 5% for the portion $500,000 and under.

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