Minimum down payment to buy a home in Canada

In Canada the minimum down payment is not a single number — it depends on the price of the home and works in tiers. The three tiers are: 5% on the first $500,000 of the price; 10% on any portion between $500,000 and $1,500,000; and for homes priced at $1,500,000 or more, 20% of the full price. So a home under half a million needs just 5% down, but the higher the price climbs, the more the required percentage steps up. The rule is the same for every newcomer and Farsi-speaker buying a first home.

Working through the math is the easiest way to understand the tiers. A $400,000 home is entirely under $500,000, so it is a flat 5% = $20,000. A $700,000 home needs 5% on the first $500,000 ($25,000) plus 10% on the remaining $200,000 ($20,000) = $45,000. A $1,200,000 home is $25,000 plus 10% of $700,000 ($70,000) = $95,000. A $1,600,000 home is over the cap, so it is a flat 20% = $320,000, with no mortgage insurance available above $1.5M.

If you put down less than 20%, your mortgage is "high-ratio," and Canadian rules require mortgage loan insurance. This is usually obtained through CMHC (a government agency) and actually protects the lender against default, not you — but you pay for it. The premium depends on your loan-to-value ratio and runs roughly 2.8% to 4.0% of the loan amount; the smaller your down payment, the higher the percentage. The good news is the premium is usually added onto the mortgage rather than paid in cash up front. A key point for newcomers: insurance is only available on homes under $1,500,000 (a cap raised from $1M in December 2024). And a 30-year amortization is now allowed for first-time buyers and new builds, which lowers the monthly payment a little.

If you put down 20% or more, your mortgage is "conventional" and you do not need CMHC insurance at all. That means you skip the 2.8–4.0% premium and your total loan stays lower. For homes at $1,500,000 or above, 20% is not a choice but the mandatory minimum, because insurance simply isn't available at those prices. Many people assume a smaller down payment is always better, but reaching 20% has two benefits: you avoid the insurance cost, and you borrow less — paying less interest over the years. Just don't drain every dollar of savings into the down payment (more on that in the closing-costs section).

Your lender doesn't just want to see the number — they want to know where the money came from and that it's truly yours. Three common sources: 1) Your own savings in a bank account, TFSA, or investments — you'll usually need to show a 90-day history of the funds with bank statements. 2) A gift from family — a gifted down payment from an immediate family member is allowed, but you must sign a gift letter confirming it is a gift, not a loan to be repaid. 3) First-home programs like the FHSA or the RRSP Home Buyers' Plan. If money recently landed in your account — common for newcomers who transferred funds from abroad — keep the transfer records, because funds whose source you can't prove are usually not accepted.

Examples of closing costs: land transfer tax, which varies by province and even city and can run several thousand dollars (some provinces offer a first-time-buyer rebate); legal or notary fees; a home inspection; and, if your mortgage is high-ratio, the provincial sales tax on the CMHC premium (CMHC PST), which — unlike the premium itself — cannot be added to the loan and must be paid in cash. A simple rule: on top of the down payment, set aside roughly 2–4% of the price for closing day.

Now that you understand the tiers, the next step is simple: take the price of the home you have in mind, apply the tiers to it, and find your own minimum down payment. Then compare it to your savings — and remember to set aside another 2–4% for closing costs. If you want to know what your monthly payment would be with that down payment, or how much more you need to save, our calculator does the work. For an exact rate and pre-approval, talk to our Farsi-speaking specialist.