What Is a Down Payment and How Much Do I Need in Canada: Full Guide

A down payment is the upfront portion of a home's purchase price that you pay from your own funds — the rest comes from a mortgage. In Canada, this initial payment directly shapes your mortgage size, insurance costs, and long-term interest. Understanding what is a down payment and how much do i need in canada is the first step toward buying property without financial surprises.

Minimum Down Payment Rules in Canada

The federal minimum depends on the property price. For homes up to $500,000, you need 5%. On the portion between $500,000 and $1,500,000, the requirement rises to 10%. Properties above $1,500,000 require at least 20%, and that threshold also applies to rentals and refinances. A $700,000 home, for example, needs $25,000 (5% of $500,000) plus $20,000 (10% of $200,000) — $45,000 total.

How Your Down Payment Affects Mortgage Insurance

With less than 20% down, your mortgage is "high-ratio" and must be insured by CMHC, Sagen, or Canada Guaranty. Insurance premiums range roughly from 2.8% to 4% of the loan and are usually added to your mortgage balance. Putting 20% or more avoids the premium entirely and opens access to conventional lenders with better rates.

How Much Should You Actually Put Down?

Beyond the legal minimum, aim for 20% if your savings allow — it eliminates insurance costs and lowers monthly payments. First-time buyers can use the Home Buyers' Plan to withdraw up to $60,000 from an RRSP tax-free, and the First Home Savings Account offers tax-free growth. Lenders also expect you to prove the source of your down payment, so keep at least 90 days of bank statements ready.

In short, knowing what is a down payment and how much do i need in canada comes down to price, property type, and your budget. The minimum is 5–20% depending on value, but 20% saves you the most over time.

Calculate your target down payment today and speak with a licensed Canadian mortgage broker to confirm your exact requirements before you make an offer. Перейти к подборке →