What Is a Down Payment on a House in Canada: Rules, Minimums, and Costs

A down payment is the portion of a home's purchase price that a buyer pays upfront, without financing it through a mortgage. In Canada, this initial cash contribution directly shapes your mortgage size, your insurance costs, and the total interest you pay over the life of the loan. Understanding what is a down payment on a house in Canada — and how the federal minimums work — is the first step toward a realistic purchase plan.

Minimum Down Payment Requirements in Canada

Canada's minimum down payment is tiered by purchase price. For homes priced up to $500,000, you need 5% of the price. For the portion between $500,000 and $1,500,000, the requirement rises to 10%. On a home above $1,500,000, a full 20% down payment applies.

A quick example: on a $700,000 property, the minimum is 5% on the first $500,000 ($25,000) plus 10% on the remaining $200,000 ($20,000) — a total of $45,000. Buyers with less than a 20% down payment must obtain mortgage default insurance, which protects the lender and is typically added to the mortgage balance.

How Down Payment Size Affects Your Mortgage

The size of your down payment changes both eligibility and cost. With 20% or more down, you avoid default insurance premiums entirely and gain access to conventional mortgage options. With a smaller down payment, insurance premiums apply and can add thousands to your borrowed amount.

Lenders also apply a stress test to insured mortgages, meaning you must qualify at a higher benchmark rate than your contract rate. A larger down payment lowers the loan-to-value ratio, improves approval odds, and reduces monthly carrying costs. In short, the down payment is not just a hurdle — it is a lever on your entire financing structure.

Where the Money Can Come From

Canadian lenders accept down payments from several verified sources: personal savings, a gift from an immediate family member (with a signed gift letter), proceeds from selling another property, or funds from an RRSP under the Home Buyers' Plan, which allows withdrawals of up to $60,000 per person. Borrowed funds such as personal loans or credit lines are generally not accepted as a down payment. Lenders require proof of source and a 90-day history of the funds.

Conclusion: In Canada, a down payment starts at 5% and scales with price, with 20% marking the threshold for avoiding mortgage insurance. Knowing the minimums, the insurance implications, and acceptable funding sources lets you plan a purchase with confidence rather than guesswork.

Check your target home price against Canada's tiered down payment rules today and confirm your savings plan meets the minimum before you start house hunting. Перейти к подборке →