Minimum down payment rules in Canada

The short answer

In Canada, the minimum down payment depends on the price. For a home under $1,500,000, you need 5% of the first $500,000 and 10% of the part above $500,000. At $1,500,000 or more, you need at least 20%, because homes at that price can't have an insured mortgage.

Any down payment under 20% means your mortgage must carry mortgage default insurance, and you'll pay a premium. Putting 20% or more down avoids the premium.

How the minimum is calculated

The rule works like tax brackets: a lower rate on the first part of the price, a higher rate on the rest. Here is the calculation for a $700,000 house:

1. 5% of the first $500,000 = $25,000
2. 10% of the remaining $200,000 = $20,000
3. Minimum down payment = $45,000, or 6.43% of the price

With that minimum, the mortgage would be $655,000 and the insurance premium about $26,200, usually added to the loan. To avoid insurance entirely you'd need 20% down: $140,000.

For homes priced at $500,000 or less, the minimum is a flat 5% of the price. These are federal rules, so the minimum is the same across Canada. What changes from place to place is the price of homes and the closing costs on top.

Minimum down payment by price

Premiums use the standard rate for a 25-year amortization at the minimum down payment. Ontario, Quebec and Saskatchewan also charge sales tax on the premium, paid in cash at closing.

The $1,500,000 line

Since December 15, 2024, insured mortgages are available for homes priced below $1,500,000. At or above that price there's no insurance, so lenders need at least 20% down. The jump is sharp:

• At $1,499,000, the minimum is $124,900 (8.33%).
• At $1,500,000, the minimum is $300,000 (20%).

That's $175,100 more cash for a price difference of $1,000. If you're shopping near this price, know which side of the line a home falls on before you make an offer.

Three- and four-unit homes

The tiered rule applies to homes with one or two units. For an owner-occupied home with three or four units, CMHC requires 10% down, with a maximum loan-to-value of 90%. On an $800,000 fourplex that is $80,000, compared with $55,000 for a one- or two-unit home at the same price.

Why 20% down matters

At 20% or more down, your mortgage is uninsured (often called conventional). That changes several things:

• No insurance premium. On the $700,000 example, that avoids about $26,200.
• The $1,500,000 cap doesn't apply. Uninsured mortgages are the only option at that price or above.
• Lenders set their own limits for debt ratios and amortization, within their own policies. The stress test still applies at federally regulated lenders.
• The 30-year insured option is off the table. The insured 30-year amortization for first-time buyers and new builds is only for loans above 80% loan-to-value. Ask lenders what amortizations they offer on uninsured mortgages.

Waiting to save 20% isn't always better. Prices, rents and rates can all change while you save. Compare the premium with what you'd pay in rent and the time it would take. See insured vs uninsured mortgages for a fuller comparison.

Where your down payment can come from

CMHC lists savings, the proceeds from selling a property and a non-repayable gift from a relative as traditional down payment sources. Government savings programs can help you build it:

• Your own savings and investments. Lenders will ask for statements showing the money and where it came from.
• A gift from a relative. It must not have to be repaid. Lenders usually ask for a signed gift letter and proof the money is in your account before closing.
• First Home Savings Account (FHSA). Up to $8,000 of contribution room a year and $40,000 over your lifetime, so at least 5 years to fill it. Contributions are generally tax-deductible, and a qualifying withdrawal to buy your first home is not taxed.
• RRSP Home Buyers' Plan (HBP). Withdraw up to $60,000 per person from your RRSP. You repay it to your RRSP over 15 years; for withdrawals made from 2022 to 2028, repayments start in the fifth year after the year of your first withdrawal.
• Sale of a property you already own.

The CRA says you can use the FHSA and the HBP for the same home if you meet the conditions for each. A couple who both qualify could in principle put up to $200,000 of FHSA contributions and HBP withdrawals toward the same home, plus any investment growth in their FHSAs. Details and other programs are in our first-time home buyer programs guide.

Borrowed (non-traditional) down payments

CMHC also accepts some non-traditional down payments, such as an unsecured personal loan or unsecured line of credit, for one- and two-unit homes with a loan-to-value from 90.01% to 95%, for borrowers with a strong credit history. The premium is higher: 4.50% instead of 4.00%.

On a $500,000 home with the minimum down, that's about $2,375 more in premium. The loan's payment also counts in your TDS ratio, which lowers the mortgage you qualify for. Not every lender or insurer offers this option.

Proving your down payment

Lenders and insurers need to see that the down payment is really yours and that it isn't a hidden loan. Expect to show:

• Account statements covering recent months, for every account the money is in. Lenders look for a steady history, so a large recent deposit will need an explanation and proof of where it came from.
• A gift letter signed by the relative giving you money, plus proof the funds have reached your account.
• FHSA and RRSP statements if you'll withdraw from either, and a plan for timing the withdrawal before closing.
• A sale agreement if the money is coming from selling a home you own.

Move money into one account early and avoid shifting it around close to your application. Each transfer is one more thing to document.

Cash to close: more than the down payment

The down payment is only part of the cash you need. For the $700,000 example in Ontario with a first-time buyer refund, our estimate of closing costs is about $11,271:

• Ontario land transfer tax after the first-time buyer refund: $6,475
• Sales tax on the insurance premium, paid in cash: $2,096
• Legal fees, title insurance, inspection and appraisal (our estimates; quotes vary): $2,700

That brings the cash needed to about $56,271 at the minimum down payment. Land transfer tax varies a lot by province and city; check yours with the closing costs calculator or our closing costs guide.

Next steps

1. Find your minimum with the down payment calculator.
2. Add closing costs with the closing costs calculator, so you know your total cash to close.
3. Check whether your income supports the mortgage in the affordability calculator.
4. Gather statements for every source you'll use, including any gift letter, before you apply for a pre-approval.