Minimum down payment rules in Canada 2026
The minimum down payment required to purchase a home in Canada depends on the purchase price. There is no single percentage — the rule is tiered, with the minimum percentage increasing for higher-priced properties. Understanding these tiers is essential for first-time buyers calculating how much they need to save before they can enter the market.
| Purchase price | Minimum down payment | Minimum % | CMHC required? |
|---|---|---|---|
| Up to $500,000 | 5% of purchase price | 5.00% | Yes |
| $500,001 – $999,999 | 5% on first $500K + 10% on remainder | 5.0% – 9.99% | Yes |
| $1,000,000 – $1,499,999 | 20% of purchase price | 20.00% | No (not eligible) |
| $1,500,000 or more | 20% of purchase price | 20.00% | No (not eligible) |
Worked examples by purchase price
Example 1: $450,000 home
Minimum down payment: 5% × $450,000 = $22,500. This is a straight 5% calculation since the price is below $500,000. The CMHC premium at 5% down is 4.0% × ($450,000 − $22,500) = 4.0% × $427,500 = $17,100. Total insured mortgage: $427,500 + $17,100 = $444,600.
Example 2: $700,000 home
The tiered rule applies. First $500,000 at 5% = $25,000. Remaining $200,000 at 10% = $20,000. Total minimum down payment: $45,000 (6.43% effective). The CMHC premium at 6.43% down falls in the 5–9.99% tier: 4.0% × ($700,000 − $45,000) = 4.0% × $655,000 = $26,200. Total insured mortgage: $655,000 + $26,200 = $681,200.
Example 3: $900,000 home
First $500,000 at 5% = $25,000. Remaining $400,000 at 10% = $40,000. Total minimum down payment: $65,000 (7.22% effective). CMHC premium at 7.22% down (still 5–9.99% tier): 4.0% × $835,000 = $33,400. Total insured mortgage: $835,000 + $33,400 = $868,400.
Why 20% is the key threshold
Reaching 20% down eliminates CMHC insurance entirely, which has three important effects:
- Lower mortgage balance: No premium added to the loan. On a $700,000 home, avoiding CMHC saves $22,400 in premium at 10% down (3.10% × $630,000) — and approximately $36,000 in total compounded cost.
- Access to 30-year amortization: Insured mortgages are capped at 25 years. Uninsured mortgages (20%+ down) can amortize over 30 years, reducing monthly payments by approximately 12–15% compared to the same loan at 25 years.
- No CMHC-linked restrictions: Some lender programs and features are only available on uninsured mortgages.
Whether waiting to reach 20% is worth it depends on the market. In appreciating markets, the cost of renting while saving the additional down payment can exceed the CMHC premium you are trying to avoid. Run the rent vs buy comparison using the CalcHomeRate tool to model your specific situation.
Sources of down payment in Canada
The minimum down payment must come from eligible sources. CMHC and lenders scrutinize the source of funds, particularly for down payments below 20%. Acceptable sources include:
- Personal savings: Funds held in bank accounts, GICs, TFSAs, or non-registered investments for at least 90 days. The 90-day seasoning requirement prevents borrowers from using short-term loans disguised as savings.
- RRSP Home Buyers' Plan: First-time buyers can withdraw up to $35,000 per person ($70,000 for a couple) from their RRSP tax-free under the Home Buyers' Plan. The withdrawal must be repaid over 15 years.
- First Home Savings Account (FHSA): Introduced in 2023, the FHSA allows eligible Canadians to contribute up to $8,000 per year (lifetime maximum $40,000) with tax-deductible contributions and tax-free withdrawals for a qualifying first home purchase.
- Gifted down payment: Gifts from immediate family members (parents, siblings) are acceptable in most cases. Lenders require a gift letter confirming the funds are a gift, not a loan, and most require the funds to be in the buyer's account for at least 15 days before closing.
- Proceeds from the sale of another property: Fully acceptable and typically the largest source for repeat buyers.
How to calculate your down payment target
Working backward from your target purchase price, you can calculate the minimum required down payment, the resulting CMHC premium, and the total mortgage balance. This gives you a precise savings target rather than a vague percentage estimate.
For most first-time buyers in major Canadian cities, the realistic down payment target is 5–10% (the minimum required) plus 1.5–3% of the purchase price for closing costs (land transfer tax, legal fees, title insurance, home inspection). In Ontario, first-time buyers pay a reduced land transfer tax, but the total cash required at closing consistently exceeds the down payment amount alone.
Down payment rules and the stress test
A larger down payment improves your stress test result. Because a higher down payment reduces the mortgage amount, the monthly payment at the stress test rate is lower — which means the GDS and TDS ratios are easier to satisfy. For buyers sitting just above the qualifying threshold, increasing the down payment from 10% to 15% can sometimes make the difference between qualifying and not qualifying at the target purchase price.
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