How much down payment do you need?

How the down payment minimum works in Canada

Canada uses a tiered minimum down payment that scales with the purchase price rather than a flat percentage. You need 5% on the first $500,000, 10% on the portion between $500,000 and $1,500,000, and 20%on any home priced over $1,500,000 — which is also the ceiling above which mortgage default insurance isn’t available at all. The result is that your minimum, as a percentage, creeps up as the price climbs: it’s 5% on a $400,000 home but closer to 8% by the time you reach $1.5 million. These minimums apply to owner-occupied homes; rentals and second properties carry their own, higher requirements.

• $400,000 home: 5% × $400,000 = $20,000 (5%).
• $700,000 home: 5% × $500,000 + 10% × $200,000 = $45,000 (6.4%).
• $1,500,000 home: 5% × $500,000 + 10% × $1,000,000 = $125,000 (8.3%).
• $1,800,000 home: insurance unavailable, so 20% = $360,000.

What affects the number you actually need

The purchase price sets the floor through the tiers above, but a few other things move the figure you bring to closing. Crossing the 20% threshold is the big one: below it you have an insured mortgage and pay a default-insurance premium; at or above it the premium disappears. Property type matters too — a rental or a second home needs more down than an owner-occupied place. And the down payment is only part of the cash you need: closing costs (land transfer tax, legal fees, title insurance) typically run 1.5–4% of the price on top, and in Ontario, Quebec, Saskatchewan and Manitoba the PST on the insurance premium is due in cash at closing rather than financed.

A worked example

The Nguyens are buying an $800,000 townhouse in Milton. Because the price crosses the first tier, their minimum is 5% on the first $500,000 ($25,000) plus 10% on the next $300,000 ($30,000) — a total of $55,000, or 6.9% of the price. With $55,000 down they finance $745,000, and because they’re under 20% they have an insured mortgage with a premium of roughly 4% of the loan, around $29,800, added to the balance.

Compare that to going conventional at 20%: $160,000 down, a $640,000 mortgage, and no premium at all. The gap is real — $105,000 more cash up front to save the premium and shrink the loan. Most first-time buyers don’t wait for the full 20%, because the insured route lets them buy years sooner and insured rates are often lower than conventional ones, which offsets much of the premium. Put your own price into the slider above to see the minimum and the premium update side by side.

How to save a down payment faster

Three tools do most of the heavy lifting. The First Home Savings Account (FHSA)lets you contribute up to $8,000 a year (to a $40,000 lifetime cap), deductible from income like an RRSP, and withdraw it tax-free for a first home — the best-of-both-worlds account for most buyers. The RRSP Home Buyers’ Plan lets each buyer pull up to $60,000 from an RRSP tax-free, repaid over 15 years, and the two stack for couples. A gifted down payment from an immediate family member is fully accepted — the lender just needs a gift letter confirming it’s not a loan, plus proof the funds landed in your account. Whatever the source, lenders verify a 90-day history on the money, so move it into place early rather than the week before closing.

Related scenarios

Once you know your down payment, the next questions are the premium and the monthly cost. Size the insurance precisely with the CMHC insurance calculator, then see what the resulting mortgage costs each month — and what a bigger down payment would save — in the mortgage payment calculator. Before you finalize the cash you’ll need at closing, add land transfer tax and legal fees using the closing costs calculator.