Before you decide what you can afford, it’s good to look at the big picture of what buying a condo actually costs. (Spoiler alert: you’re going to pay more than the listing price…) Here’s what you need to know about everything from how much your down payment should be, what your monthly payments might look like, what taxes you’ll need to factor in, and all the other expenses that come with closing on a new place.
The down payment. This is what you’ve been saving up for – it’s the first chunk of cash you hand over when you buy. The bigger your down payment, the smaller your monthly payments will be, and the less interest you’ll pay over the life of your loan. If the condo is less than $500K, you need to put down a minimum of 5% ($25K). In the $500K to $999,999 range, the minimum is 5% on the first $500K and 10% on the balance. If you’re above $1M, it’s 20% - and over $1.2M, it’s often even more and varied depending on the bank. Read up on down payments.
Mortgage loan insurance. Putting down less than 20%? Keep reading. Mortgage loan insurance protects your lender in case you can’t make your payments, and it’s mandatory if your down payment is less than 20%, no matter what the cost of the condo. The insurance gets added to your mortgage payments (or you can pay it in a lump sum if you prefer), and depends on the size of your down payment. And you’ll need to pay the PST on your mortgage loan insurance in a lump sum at closing, so that needs to be factored into your closing costs too.
Closing costs. These are what you pay to “close the deal,” and are typically 1.5-4% of your purchase price. They include everything from lawyers’ fees to various taxes, all due on closing, and will likely run you $3-5K above and beyond your purchase price. See a breakdown of typical closing costs.
Parking. In new builds, parking spots in condos are sold separately from your actual unit, and can run you anywhere from $20-$200K, depending on the building and the location. For resale condos, they tend to be included in the sale price - if the person selling has a spot.
Wait, don't I have to pay my agent? Nope. The owner who’s selling the condo pays a commission, which is shared with your agent. As a buyer, you don’t pay for those services. Here’s a great article that explains it.
Now that you’ve got a sense of what it costs to buy, it’s also good to get your head around what your monthly costs will look like once you’ve moved in. Read all about it here.