The minimum down payment
Canada's minimum down payment is tiered by purchase price:
| Purchase price | Minimum down payment |
|---|---|
| $500,000 or less | 5% of the price |
| $500,000 to $1,499,999 | 5% of the first $500,000, plus 10% of the portion above $500,000 |
| $1.5 million or more | 20% of the price. Mortgage insurance isn't available. |
The $1.5 million threshold took effect on December 15, 2024. Before that, the insured limit was $1 million, which meant buyers above $1 million needed 20% down.
Worked example: a $700,000 home
- 5% of the first $500,000 = $25,000
- 10% of the remaining $200,000 = $20,000
- Minimum down payment = $45,000, about 6.4% of the price
Mortgage default insurance
If your down payment is less than 20%, your mortgage must be insured against default. The insurance protects the lender, not you. In exchange, you can buy with less down, and insured mortgages often get lower rates because the lender's risk is covered.
Three companies provide it: CMHC (a federal Crown corporation), Sagen, and Canada Guaranty. Their premiums are generally very similar. The premium is a percentage of the mortgage amount, based on your down payment:
| Down payment | Premium (share of mortgage) |
|---|---|
| 5% to 9.99% | 4.00% |
| 10% to 14.99% | 3.10% |
| 15% to 19.99% | 2.80% |
| 20% or more | Not required |
A 30-year amortization adds 0.20 percentage points to the premium. Insurers can change their premiums, so confirm current rates with your lender.
Back to the $700,000 home with $45,000 down
- Mortgage before insurance: $655,000
- Premium at 4.00%: $26,200
- Mortgage after insurance: $681,200
The premium is usually added to the mortgage, so you pay interest on it for the whole amortization. In Ontario, Quebec and Saskatchewan, provincial sales tax also applies to the premium. That tax can't be added to the mortgage and has to be paid at closing.
Decoder ring: 19% vs. 20%
Going from 19% down to 20% down removes the premium entirely. On a $700,000 home, that last 1% ($7,000) saves a 2.80% premium on about $567,000, roughly $15,900, plus the interest you'd pay on it. If you're close to a threshold, it can be worth stretching.
30-year amortizations
Insured mortgages are normally limited to 25 years. Since December 15, 2024, two groups can get a 30-year insured amortization:
- First-time homebuyers, buying a new or resale home
- Buyers of newly built homes, whether or not they're first-time buyers
A longer amortization lowers your payment and helps you qualify, but costs more interest over the life of the mortgage. Compare 25 and 30 years in the payment calculator. Uninsured mortgages, with 20% or more down, can generally be amortized up to 30 years at most lenders.
Where the down payment can come from
- Savings and investments, with statements showing at least 90 days of history. Lenders want to see the money didn't appear from nowhere.
- A First Home Savings Account (FHSA): contributions up to $8,000 a year, $40,000 lifetime, are tax-deductible, and qualifying withdrawals for a first home are tax-free.
- The RRSP Home Buyers' Plan: first-time buyers can withdraw up to $60,000 from an RRSP and repay it over 15 years.
- A gift from an immediate family member, with a signed gift letter confirming it doesn't have to be repaid.
- Proceeds from selling a home.
Borrowed down payments are restricted on insured mortgages. Ask your lender before you use a line of credit or loan.
Don't forget closing costs
Lenders typically want to see you have about 1.5% of the purchase price available for closing costs, on top of your down payment. These include legal fees, title insurance, an inspection, adjustments for prepaid property tax, and in most provinces a land transfer or property transfer tax. First-time buyer exemptions or rebates exist in several provinces, including BC and Ontario. Worksheet B-2 in the free worksheet pack walks through every line.