How much down payment do you need in Canada?

The down payment is the part of the price you pay yourself, and the minimum depends on how much the home costs. Put down less than 20% and you need mortgage default insurance, which adds a premium to your loan. This guide explains the minimums, what insurance costs, where the money can come from and how much you really need in cash.

The short version: you need 5% of the first $500,000 of the price plus 10% of the part from $500,000 to $1.5 million. At $1.5 million or more, you need at least 20%.

The minimum down payment rules

For a home priced up to $1.5 million, the minimum down payment is 5% of the first $500,000 plus 10% of the portion above $500,000. For a home priced at $1.5 million or more, the minimum is 20%. The $1.5 million insurance limit took effect on December 15, 2024, and CMHC requires the price to be below that figure.

Examples:

• $400,000 home: 5% = $20,000.
• $600,000 home: $25,000 + 10% of $100,000 = $35,000.
• $850,000 home: $25,000 + $35,000 = $60,000.
• $1,200,000 home: $25,000 + $70,000 = $95,000.
• $1,500,000 home: 20% = $300,000.

What happens when you put down less than 20%

With less than 20% down, your mortgage must be insured. The insurance protects the lender, but you pay the premium. It is a percentage of the loan, it rises as your down payment shrinks, and most buyers add it to the mortgage instead of paying it up front.

According to CMHC, the premium is 4.00% of the loan with 5% to 9.99% down, 3.10% with 10% to 14.99% down, and 2.80% with 15% to 19.99% down. A 30-year amortization adds 0.20%. In some provinces, including Ontario and Québec, provincial sales tax on the premium is due in cash at closing.

Example: a $600,000 home at three down payments

• Minimum, $35,000 down: loan $565,000, premium 4.00% = $22,600, mortgage $587,600. Payment at 4%, 25 years: about $3,091 a month.
• 10%, $60,000 down: loan $540,000, premium 3.10% = $16,740, mortgage $556,740. Payment: about $2,929 a month.
• 20%, $120,000 down: loan $480,000, no premium. Payment: about $2,525 a month.

The extra $25,000 between the minimum and 10% down saves about $162 a month and $5,860 in premium. Waiting to save a full 20% avoids the premium, but compare that saving with the price growth you might miss while you wait.

Where the down payment can come from

CMHC accepts savings, proceeds from selling a property, and non-repayable gifts from relatives as traditional sources. Lenders usually want a signed letter confirming that a gift does not have to be repaid.

Two federal programs can add to your savings. The First Home Savings Account (FHSA) allows $8,000 a year and $40,000 in total, with tax-deductible contributions and tax-free withdrawals for a first home. The RRSP Home Buyers' Plan lets you withdraw up to $60,000 from your RRSP without tax, repaid over 15 years. You can use both for the same purchase.

CMHC also allows a limited non-traditional source, such as an unsecured personal loan or line of credit, for some one- and two-unit homes with 5% to 9.99% down. It requires strong credit and carries a higher premium of 4.50%.

Cash you need beyond the down payment

Closing costs are paid in cash and are separate from your down payment. CMHC suggests planning for about 1.5% to 4% of the price for items such as legal fees and land transfer tax. On a $600,000 home that is roughly $9,000 to $24,000. Add moving costs and early repairs.

Putting down more

A larger down payment lowers your mortgage and your monthly payment. At 20% or more you avoid the insurance premium, and you build equity from day one. A smaller down payment gets you into a home sooner, but costs more over time through the premium and the interest on it.

Rules can change, so confirm the current figures with your lender.

Sources: CMHC: general requirements for homeowner mortgage loan insurance, CMHC: premium information, Department of Finance: mortgage reforms.