Down Payment

The Canadian minimums

Minimum down payments in Canada are tiered by purchase price (as of July 2026): 5% of the first $500,000, plus 10% of the portion from $500,000 up to $1,499,999. Homes priced at $1.5 million or more require at least 20% down, because insured mortgages are simply not available at that price.

Here is what the formula produces at three price points:

The 20% line: insured vs. uninsured

Everything about your mortgage changes at 20%. Below it, your loan must carry mortgage default insurance, with a premium of 4.00%, 3.10%, or 2.80% of the loan amount depending on whether your down payment lands in the 5%, 10%, or 15% tier (as of July 2026). The premium is normally added to your balance, and the amortization is generally capped at 25 years, with an insured 30-year option for first-time buyers and new construction.

At 20% or more, the mortgage is uninsured: no premium, and most lenders will amortize up to 30 years. Uninsured rates often run slightly higher than insured ones, a wrinkle explained in the default insurance entry.

Where a down payment can come from

Lenders accept several sources, and many buyers combine a few:

• Personal savings and investments, including money held in a TFSA.
• An [FHSA](/dictionary/fhsa), the first home savings account: contributions are tax-deductible and qualifying withdrawals, growth included, are tax-free.
• The [HBP](/dictionary/hbp), which lets a first-time buyer withdraw up to $60,000 from an RRSP tax-free (as of July 2026), repayable over 15 years.
• Gifted funds from an immediate family member. The lender requires a signed gift letter confirming the money is a true gift and never has to be repaid; a disguised loan would change your debt ratios and can sink the approval.
• Proceeds from selling your current home, documented through the sale agreement and closing statements.

The 90-day paper trail

Under federal anti-money-laundering rules, your lender must verify where your down payment came from. Expect to hand over roughly 90 days of statements for every account the money passed through, and to explain any large or unusual deposit inside that window: a car sale, a bonus, a transfer between your own accounts. Gifts need the letter, and funds arriving from overseas draw extra scrutiny. None of this is a judgment of you; clean records simply make the approval faster.

Bigger than the minimum: how far to push

Every extra dollar of down payment shrinks the loan, and until you reach 20% it can shrink the insurance premium too, since the premium tiers step down at 10% and 15%. Reaching 20% eliminates the premium entirely.

But do not empty every account to get there. A buyer who scrapes to 20% with nothing left is one furnace failure away from a credit card balance, while a buyer who kept an emergency fund and paid the premium can absorb the hit. Stretching to dodge the premium only wins if you can do it without going house-poor. Run the numbers both ways, including what your emergency fund looks like the day after closing.

Closing costs come on top

The down payment is not your only cash need. Budget an additional 1.5% to 4% of the purchase price for closing costs: land transfer tax (the largest item in most provinces), legal fees, a home inspection, title insurance, and adjustments. In some provinces, sales tax on the insurance premium is also due in cash at closing. A $55,000 minimum down payment on an $800,000 home can easily mean $75,000 or more of total cash to close.