How Much Down Payment Do You Need?
Minimum Down Payment Requirements
| Home Price | Minimum Down Payment |
|---|---|
| Up to $500,000 | 5% |
| $500,000 - $999,999 | 5% on first $500K + 10% on remainder |
| $1,000,000+ | 20% |
Example Calculations
| Home Price | Minimum Down | 20% Down |
|---|---|---|
| $400,000 | $20,000 (5%) | $80,000 |
| $600,000 | $35,000 (mixed) | $120,000 |
| $800,000 | $55,000 (mixed) | $160,000 |
| $1,000,000 | $200,000 (20%) | $200,000 |
CMHC Insurance Costs
| Down Payment | Insurance Premium |
|---|---|
| 5-9.99% | 4.00% of mortgage |
| 10-14.99% | 3.10% of mortgage |
| 15-19.99% | 2.80% of mortgage |
| 20%+ | $0 (no insurance required) |
Example: $500,000 home with 5% down = $475,000 mortgage × 4% = $19,000 insurance added to mortgage.
Best Accounts for Down Payment Savings
Account Comparison
| Account | Tax Deduction | Tax-Free Growth | Tax-Free Withdrawal | Best For |
|---|---|---|---|---|
| FHSA | Yes | Yes | Yes (home purchase) | First-time buyers |
| TFSA | No | Yes | Yes | Everyone |
| RRSP (HBP) | Yes | Yes | Yes (must repay) | Additional savings |
| HISA | No | No | Yes | Short-term (<2 years) |
| GIC | No | No | Yes | Short-term, locked |
FHSA (First Home Savings Account)
| Feature | Details |
|---|---|
| Annual contribution | $8,000 |
| Lifetime maximum | $40,000 |
| Tax deduction | Yes (like RRSP) |
| Growth | Tax-free |
| Withdrawal | Tax-free for qualifying home |
| Best for | First-time home buyers |
Example FHSA Growth:
| Year | Contribution | Tax Refund (30% bracket) | Balance (5% growth) |
|---|---|---|---|
| 1 | $8,000 | $2,400 | $8,400 |
| 2 | $8,000 | $2,400 | $17,220 |
| 3 | $8,000 | $2,400 | $26,481 |
| 4 | $8,000 | $2,400 | $36,205 |
| 5 | $8,000 | $2,400 | $46,415 |
5-year result: $40,000 contributed + $6,415 growth + $12,000 tax refunds = $58,415 toward down payment.
RRSP Home Buyers’ Plan (HBP)
| Feature | Details |
|---|---|
| Maximum withdrawal | $60,000 per person ($120,000 per couple) |
| Repayment | Must repay over 15 years |
| First payment | Starts 2 years after withdrawal |
| Tax | Tax-free withdrawal if repaid |
Strategy: Use FHSA first, then HBP for additional funds.
TFSA for Down Payment
| Feature | Details |
|---|---|
| Contribution room | ~$7,000/year (2024) |
| Growth | Tax-free |
| Withdrawal | Tax-free, room restored next year |
| Best for | After maxing FHSA |
Savings Strategies
How Much to Save Monthly
| Target Down Payment | Timeline | Monthly Savings Needed |
|---|---|---|
| $50,000 | 3 years | $1,389 |
| $50,000 | 5 years | $833 |
| $100,000 | 5 years | $1,667 |
| $100,000 | 7 years | $1,190 |
Not including investment growth.
Accelerating Your Savings
| Strategy | Potential Impact |
|---|---|
| Automate transfers | Consistent savings without thinking |
| Save tax refunds | FHSA refund = $2,400+/year |
| Reduce rent | Roommate saves $500-1,000/month |
| Side income | $500-1,500/month extra |
| Reduce subscriptions | $100-300/month |
| Cut car costs | Transit saves $300-600/month |
| Employer RRSP match | Free money (use HBP later) |
The “Pay Yourself First” System
| Step | Action |
|---|---|
| 1 | Calculate target monthly savings |
| 2 | Set up auto-transfer on payday |
| 3 | Put in FHSA first ($667/month to max) |
| 4 | Overflow to TFSA |
| 5 | Budget with what’s left |
Investment Strategy by Timeline
Short-Term (1-2 years)
| Option | Expected Return | Risk |
|---|---|---|
| FHSA Savings Account | 3-4% | Very low |
| GICs | 4-5% | None (locked) |
| HISA | 3-4% | Very low |
Strategy: Don’t invest in stocks — too risky for short timeline.
Medium-Term (3-5 years)
| Option | Expected Return | Risk |
|---|---|---|
| Conservative ETF (VCNS) | 4-5% | Low |
| GIC ladder | 4-5% | None |
| Balanced ETF (VBAL) | 5-6% | Moderate |
Longer-Term (5+ years)
| Option | Expected Return | Risk |
|---|---|---|
| Balanced ETF (VBAL) | 5-6% | Moderate |
| Growth ETF (VGRO) | 6-7% | Higher |
| All-equity (VEQT) | 7-8% | Highest |
Government Programs That Help
First-Time Home Buyer Programs
| Program | Benefit |
|---|---|
| FHSA | Tax-deductible + tax-free growth |
| RRSP HBP | Withdraw $60,000 tax-free |
| First-Time Home Buyers’ Tax Credit | $1,500 tax credit |
| Land Transfer Tax Rebate (ON) | Up to $4,000 (provincial) |
| GST/HST New Housing Rebate | Portion of GST on new homes |
Provincial Programs
| Province | Program |
|---|---|
| BC | First-Time Home Buyers’ Program (PTT exemption) |
| Ontario | Land Transfer Tax Rebate |
| Quebec | Home Buyers’ Tax Credit |
Down Payment Sources
Acceptable Sources
| Source | Lender View |
|---|---|
| Personal savings | Best — shows financial discipline |
| FHSA withdrawal | Excellent |
| RRSP HBP withdrawal | Excellent |
| Gifted funds | Acceptable with gift letter |
| Sale of assets | Acceptable with documentation |
| Inheritance | Acceptable |
What Lenders Want to See
| Factor | Requirement |
|---|---|
| Source documentation | 90 days of bank statements |
| Gifted funds | Gift letter (no repayment required) |
| Large deposits | Explanation required |
| Borrowed down payment | Generally not allowed |
Action Plan
Step-by-Step
| Step | Action |
|---|---|
| 1 | Calculate target home price and down payment |
| 2 | Open FHSA account |
| 3 | Set up automatic contributions to FHSA |
| 4 | Contribute to TFSA after maxing FHSA |
| 5 | Claim FHSA deduction, reinvest tax refund |
| 6 | Consider RRSP for additional HBP funds |
| 7 | Track progress toward goal |