How much down payment do you need to buy a home in Canada?
Everyone has heard you need 20% down. In Canada you can often buy with much less, as long as you understand the trade-offs.
The minimum down payment rule
The Financial Consumer Agency of Canada (FCAC) sets out the minimums by purchase price:
- $500,000 or less: 5% of the price.
- $500,000 to $1.5 million: 5% of the first $500,000, plus 10% of the amount above $500,000.
- $1.5 million or more: 20% of the price.
A worked example
Take a home priced at $700,000. The numbers are illustrative.
| Step | Calculation | Amount |
|---|---|---|
| 5% of the first $500,000 | $500,000 x 5% | $25,000 |
| 10% of the remaining $200,000 | $200,000 x 10% | $20,000 |
| Minimum down payment | $25,000 + $20,000 | $45,000 |
| Mortgage before any insurance premium | $700,000 - $45,000 | $655,000 |
So the minimum is about 6.4% of the price, not a flat 5%. The cheapest rung is only the first slice.
What mortgage loan insurance adds
FCAC says that if your down payment is under 20% you will typically need mortgage loan insurance. It protects the lender, not you. Premiums range from 0.6% to 4.5% of the mortgage amount, and a bigger down payment means a lower premium. On the $655,000 mortgage above, that range works out to roughly $3,930 at 0.6% and $29,475 at 4.5%. Your actual premium depends on your down payment and lender, so ask for the exact figure.
Since December 15, 2024, the Government of Canada has allowed insured mortgages on homes up to $1.5 million, up from $1 million. It also allows 30-year amortizations for all first-time buyers and buyers of new builds, which can lower monthly payments. Lenders can still have their own rules.
Where the money must come from
FCAC says the minimum down payment normally must come from your own funds. Self-employed buyers or those with weaker credit may be asked for more. Two accounts help many first-time buyers save: read the FHSA guide and compare it with the RRSP in RRSP vs TFSA.
Do not forget the other costs
Closing costs and a cash cushion
The down payment is not the only bill. You will also pay legal fees, taxes and moving costs, so plan for more than the minimum.
Renewal and penalty risk
Your first rate is not forever. Learn what happens later in mortgage renewal in Canada and mortgage penalties.
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