Mortgage Down Payments

In Canada, you can make a down payment of as little as 5% (depending on the purchase price).

A minimum down payment of 5% can help you enter the real estate market and become a homeowner (see below for purchase price limits).

Any down payment between 5% and 20% of the home price is called a high-ratio mortgage, meaning your mortgage will require mortgage default insurance to protect the lender.

This type of insurance is provided by the Canada Mortgage and Housing Corporation (CMHC) — the most commonly used and a federal Crown corporation — or by the private providers Sagen and Canada Guaranty. You'll pay an insurance premium based on the size of your mortgage (after the down payment is deducted from the home price).

Here's the down payment size you'll need based on the home's purchase price.

• $500K or less – 5% of the purchase price
• $500K to $1,499,999 – 5% of the first $500K and then 10% for the amount over that
• $1.5M or more – you'll need 20% of the total purchase price (considered a conventional mortgage)

Where can your down payment come from?

Lenders will look at where your down payment comes from and how long you've had access to it. For the most part, a lender wants your down payment to come from your own funds, but exceptions exist (see below).

What are some ways to help with a down payment?

• Are you a first-time home buyer? Government programs and rebates offer incentives to help you save up (or save more) or free up some cash to spend on other things, like closing costs.
• If you've already been pre-qualified and know your down payment is insufficient for the home you want, foregoing certain large spends, like a new car or a vacation, can help you save up faster.
• Are you buying a newly built home? The government GST rebate can help free up funds for a larger down payment.
• You may also be able to borrow your down payment from a secured line of credit, or have it gifted by a family member (restrictions may apply; see the table above).
• Have you thought of going in with others? Co-ownership, multigenerational mortgages, and rent-to-own strategies (but beware of limits) may help you gather down payment resources.

How does an 'insured' mortgage impact your rate?

Depending on the lender, a high-ratio (insured) mortgage often means you can access lower rates than with a conventional mortgage (a mortgage that has 20% or more down).

You'll still need to qualify for your loan amount and rate through the federal mortgage stress test (which determines your ability to still afford your payments if rates go up). We can get your best rates, regardless of your down payment amount. But overall, the more money you can save and put down on your purchase, the lower your mortgage and payments will be.

Can a conventional mortgage save you more?

If you make a down payment of 20% or more on any home, it's considered a conventional mortgage, which doesn't legally require mortgage default insurance. But it means the bank holds more capital due to the higher risk in providing your mortgage, which typically leads to slightly higher rates.

Despite the potential for higher rates, the larger down payment lowers your mortgage amount, so you'll save more on monthly payments and overall interest costs.

Plus, you'll build equity in your home faster and likely have access to better product options.

A larger down payment can help your credit situation

A down payment becomes increasingly important if your credit history is less than stellar. Some lenders may overlook past credit blemishes or not insist on verifying income or other financial status if you're able to provide 35% to 40% of the purchase price for your down payment.

Don't get caught! Closing costs are over and above your down payment.

When saving for your down payment, make sure to budget for extra expenses associated with buying your home, including 'closing costs' that are due before your mortgage closes and before you get possession of your home.

If you have enough for a down payment, but can't cover the closing costs, your home purchase may be in jeopardy.

When do you actually need to provide the down-payment money?

Your down payment will need to be verified at the time of your application, but you won’t need to provide the funds from your account until your signing appointment with your lawyer (to finalize your home purchase).

However, most lenders will want to see a 90-day history of your down payment and proof of the source.

Does your purchase offer deposit come from your down payment?

Yes, you'll need to provide a deposit when you make an offer on a home — and it's considered part of your down payment.

For example, if your full down payment is $50K and you’ve provided a deposit of $10K, you’ll supply the additional $40K at the time of signing.

Get down-home advice to save the most.

From questions about your down payment to walking through your own front door, our friendly, expert brokers put you first for unbiased advice on your down payment questions.

All we do is mortgages (unlike the big banks), and we can source your best rate and mortgage that fits your situation.

Our highly trained, salaried True North Mortgage brokers can help you coast-to-coast-to-coast — online, over the phone, through our chatbot, or stop by a store near you.