What is the minimum down payment?
The minimum down payment needed in Canada is calculated based on the purchase price of a home. This is the required amount that you will put towards your home and is deducted from the home price when determining your total mortgage with the bank. The minimum down payment required depends on the price of your home. The size of your down payment will also impact if you need to purchase mortgage default insurance.
Purchase price is less than $1,500,000
- 5% on first $500,000;
- 10% on amount more than $500,000 less than $1,500,000
Purchase price is more than $1,500,000
- 20% of the purchase price
Minimum down payment example
Let’s calculate the minimum down payment needed to afford a home in Ontario as an example. As of March 2025 the average home price in Ontario was $860,545. Since this home price is less than $1,500,000 we will calculate the minimum down payment with a two step process.
The first $500,000 of the home price will require a minimum down payment of 5% which will be $500,000 X 5% = $25,000.
The portion of purchase price above $500,000 will require a minimum down payment of 20%. We need to first calculate the amount of purchase price in excess of $500,000. This amounts to $860,545 - $500,000 = $360,545 of purchase price that requires a 10% down payment. $360,545 X 10% = $36,055.
We can then add these two amounts together $36,055 + 25,000 = $61,055. Therefore, the minimum down payment for the typical home in Ontario would be $61,055.
Mortgage loan insurance
Mortgage loan insurance is purchased to protect the lender if you are no longer able to make your mortgage payments. If you are putting down a minimum down payment your lender will often request that you purchase this loan insurance. While the cost of mortgage default insurance can be added to your mortgage which will increase the total size of your mortgage, purchasing this insurance will often allow you to secure a more favourable mortgage rate which will help reduce your mortgage payment.
The cost of mortgage insurance is based on the loan to value ratio which can be calculated by dividing the loan needed by the purchase price of the home.
CMHC mortgage loan insurance premiums
These are the mortgage default premiums that would be charged based on the loan-to-value ratio LTV
| Loan-to-Value (LTV) Ratio | % Down Payment | Premium (% of Loan Amount) |
|---|---|---|
| Up to and including 65% | 35% or more | 0.60% |
| More than 65% up to 75% | Less than 35% down to 25% | 1.70% |
| More than 75% up to 80% | Less than 25% down to 20% | 2.40% |
| More than 80% up to 85% | Less than 20% down to 15% | 2.80% |
| More than 85% up to 90% | Less than 15% down to 10% | 3.10% |
| More than 90% up to 95% | Less than 10% down to 5% | 4.00% |
| (Non-Traditional Down Payment) More than 90% up to 95% | Less than 10% down to 5% | 4.50% |
Let’s go over an example on how to calculate the CMHC mortgage default insurance using the typical home price in Ontario above with the minimum down payment. Since the Ontario home price is $860,545 we are required to have a minimum down payment of $61,055. This leaves us with a mortgage loan of $799,490 which we can use to calculate the loan-to-value ratio.
The loan to value would be $799,490 / $860,545 = 92.91% which falls between 90% and 95% which would mean our premium would be 4% of our loan amount. This means our total premium would be $31,979.60.
Do you need a 20% down payment to purchase a home in Canada?
You only need a 20% down payment if the home you are purchasing is $1.5 million or more. For homes below this price point you are able to put down a lower minimum down payment. This mortgage down payment calculator helps you calculate the minimum down payment on a home as well as mortgage default insurance premiums.
What is the minimum down payment for a house in Ontario?
The minimum down payment for a house in Ontario is 5% of the purchase price if it is $500K or less. If the home price is $500K to $1.5M then the minimum down payment is 5% on the first $500K and 10% on the portion above $500K. Once the home price is $1.5 million or more then the minimum down payment is 20% of the purchase price. This is also the minimum down payment that first-time homebuyers will have to pay.
How the size of your down payment impacts the cost of your mortgage
The size of your down payment has a direct impact on your mortgage payment, which can be seen by trying different down payment amounts in a mortgage payment calculator. A minimum 5% down payment on a $500,000 home in Canada would be $25,000 which would mean you would have to pay for mortgage default insurance for a total mortgage of $494,000 which would have a monthly payment of $2,532 at a mortgage rate of 3.75% over a 25-year amortization.
Increasing the down payment on a $500,000 home to 20% or $100,000 would bring your monthly mortgage payment down to $2,050 since the total loan dropped from $494,000 to $400,000 as a result of the larger down payment which means mortgage default insurance is no longer needed. A mortgage affordability calculator is a good way to see how these variables impact the total home you are able to afford.
First-time home buyer programs in Canada
Canada offers several programs designed to help first-time buyers save for and afford a down payment:
First Home Savings Account (FHSA)
The FHSA is a registered account that combines the benefits of an RRSP and TFSA. Contributions are tax-deductible (like an RRSP), and withdrawals for a qualifying first home purchase are tax-free (like a TFSA). The annual contribution limit is $8,000, with a lifetime maximum of $40,000. Unused room can be carried forward to the next year (up to $8,000). This is one of the most tax-efficient ways for first-time buyers to save for a down payment.
Home Buyers’ Plan (HBP)
The Home Buyers’ Plan allows you to withdraw up to $60,000 from your RRSP tax-free to use as a down payment on your first home (up from $35,000 previously). Your spouse or common-law partner can also withdraw up to $60,000 from their RRSP, for a combined total of $120,000. The withdrawn amount must be repaid to your RRSP over 15 years, starting the second year after the withdrawal.
First-Time Home Buyer Tax Credit
First-time buyers can claim a $10,000 non-refundable tax credit on their federal tax return, providing up to $1,500 in tax relief. This credit can help offset some of the closing costs associated with buying a home.
GST/HST New Housing Rebate
If you buy a newly built home, you may qualify for a GST/HST rebate of up to $6,300 (federal portion) on homes priced under $450,000. Some provinces offer additional rebates.
Saving strategies for a down payment
Building a down payment takes time and discipline. Here are effective strategies Canadian buyers use:
- Open an FHSA immediately — Even if you are not buying for several years, opening an FHSA and maximizing contributions gives you a tax deduction now and tax-free growth for your down payment.
- Set up automatic transfers — Treat your down payment savings like a bill. Automate a fixed amount from each paycheque into a dedicated savings account.
- Use a high-interest savings account or GICs — Your down payment savings should be in low-risk investments. A GIC can lock in a guaranteed rate, while a high-interest savings account keeps your funds accessible.
- Reduce expenses strategically — Track your spending and identify areas to cut. Even saving an extra $500 per month adds up to $6,000 per year.
- Boost your income — Consider a side job, freelancing, or asking for a raise. Use our salary calculator to understand your current earnings and our hourly to salary calculator to evaluate side work.
- Take advantage of the HBP — If you have been contributing to an RRSP, the Home Buyers’ Plan lets you use those funds for your down payment without immediate tax consequences.
Gifted down payment rules in Canada
Many first-time buyers receive financial help from family members. Canadian lenders generally accept gifted down payments, but there are specific rules:
- Gift letter required — The person gifting the funds must provide a signed letter confirming the money is a gift and does not need to be repaid. The lender will provide a template.
- Proof of transfer — Lenders require documentation showing the money has been deposited into your account. Keep records of the bank transfer or cheque.
- Source must be an immediate family member — Most lenders require the gift to come from a parent, grandparent, or sibling. Some lenders accept gifts from other relatives.
- No repayment obligation — The gift cannot be a loan in disguise. If there is any expectation of repayment, lenders will treat it as debt, which affects your debt service ratios and mortgage qualification.
- Tax implications — Canada does not have a gift tax, so the recipient does not owe tax on the gift. However, if the gifted funds were in an investment account, the giver may owe capital gains tax on the disposition.
Down payment amount by home price
Here is a quick reference for the minimum down payment and CMHC insurance premium at various home prices:
| Home Price | Minimum Down Payment | Down Payment % | CMHC Premium | Total Mortgage (incl. premium) |
|---|---|---|---|---|
| $300,000 | $15,000 | 5% | $11,400 | $296,400 |
| $400,000 | $20,000 | 5% | $15,200 | $395,200 |
| $500,000 | $25,000 | 5% | $19,000 | $494,000 |
| $600,000 | $35,000 | 5.8% | $22,600 | $587,600 |
| $750,000 | $50,000 | 6.7% | $28,000 | $728,000 |
| $1,000,000 | $75,000 | 7.5% | $37,000 | $962,000 |
| $1,500,000 | $300,000 | 20% | $0 | $1,200,000 |
CMHC premiums are approximate and calculated based on the loan-to-value ratio. Use our mortgage default insurance calculator for exact figures.
Related calculators
- Mortgage Calculator — Calculate your monthly mortgage payment
- Mortgage Affordability Calculator — See how much home you can afford
- Mortgage Default Insurance Calculator — Calculate your CMHC insurance premium
- Closing Costs Calculator — Estimate the total cost of buying a home
- Land Transfer Tax Calculator — Calculate provincial land transfer tax
- FHSA Calculator — Plan your First Home Savings Account contributions
- RRSP Calculator — See how Home Buyers’ Plan withdrawals affect your RRSP
- Mortgage Stress Test Calculator — Check if you qualify for your mortgage
- Income to Afford Home Calculator — Find out the income needed for a specific home price