Down Payment Rules and Minimums in Canada

The minimum down payment is tiered, not flat

Canada doesn't use one universal minimum down payment percentage. Instead, federal rules tie the minimum to the home's purchase price, and the required percentage rises as the price climbs. The long-standing structure works roughly like this, though you should confirm the exact current thresholds before relying on them:

• On the portion of the purchase price up to a lower threshold (long set at $500,000), the minimum is 5%.
• On the portion above that threshold and up to a higher ceiling, the minimum rises to 10%.
• Above the higher ceiling, the minimum jumps to 20%, and the mortgage no longer qualifies for federal default insurance at all.

The federal government adjusted these thresholds in late 2024 to allow more higher-priced homes to qualify for insured mortgages with less than 20% down. Because these caps are a matter of federal housing policy and can be revisited, verify the current dollar thresholds with your lender or on the Canada Mortgage and Housing Corporation (CMHC) website before you finalize a budget.

Why the 20% line is the real dividing wall

The bigger practical divide isn't the 5% vs. 10% tier, it's whether your down payment is above or below 20% of the purchase price. Below 20%, your mortgage is considered "high-ratio" and must carry mortgage default insurance, commonly arranged through CMHC or a private insurer. That insurance protects the lender if you default; it doesn't protect you, and you pay the premium, either as a lump sum or rolled into your mortgage and amortized with interest.

At 20% or more, you qualify for a "conventional" mortgage and skip that insurance premium entirely, which can save you a meaningful amount over the life of the loan. This is why so much homebuying advice fixates on the 20% number: it's not a legal minimum for buying a home, but it is the threshold that removes an extra cost layer.

Either way, every buyer, insured or not, must pass the mortgage stress test, which qualifies you at a higher rate than your contract rate. That's a separate hurdle from the down payment itself, but it affects how much home your down payment can realistically support.

Where the down payment money is allowed to come from

Lenders and insurers care not just about how much you're putting down, but where it came from. Acceptable sources typically include your own savings, proceeds from selling another property, and funds withdrawn under registered programs designed for this purpose.

• Personal savings sitting in a bank account, TFSA, or non-registered investment account, with a paper trail showing the funds have been there long enough to satisfy the lender's requirements.
• A gift from an immediate family member, supported by a signed gift letter stating it does not need to be repaid.
• A withdrawal under the Home Buyers' Plan, which lets eligible first-time buyers pull funds from an RRSP toward a home purchase, subject to repayment rules.
• Funds from a First Home Savings Account (FHSA), which can be withdrawn tax-free for a qualifying first home purchase.

Borrowed down payment money, such as an unsecured line of credit or credit card cash advance, is generally not accepted on an insured mortgage and is viewed skeptically by most lenders even on conventional deals, because it changes your real debt load.

Building toward your number

Once you know the price range you're targeting, back into the down payment tiers to see whether you're aiming for a 5%, 10%, or full 20% down payment, and remember that closing costs, legal fees, land transfer tax, and moving expenses sit on top of the down payment itself rather than inside it.

If a 20% down payment is out of reach, that's normal and not a barrier to buying, it just means budgeting for the insurance premium and understanding it will be added to your mortgage balance. If you're a first-time buyer, stacking an FHSA and the Home Buyers' Plan together can meaningfully accelerate how fast you reach whichever tier you're targeting.

Whatever your target, run the numbers with a real amortization tool rather than a rough guess, since the difference between a 5% and 20% down payment changes both your monthly payment and your total interest paid over the life of the mortgage.

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