Minimum down payment by purchase price
Canadian federal rules tier the minimum down payment based on price. Under $500,000: 5% of the purchase price. $500,000 to $1,499,999: 5% on the first $500,000, plus 10% on any portion above that. $1,500,000 or more: 20% minimum (homes at this price cannot be insured by CMHC, Sagen, or Canada Guaranty, so they must be conventional mortgages).
Working examples. A $400,000 home requires $20,000 minimum down. A $700,000 home requires $25,000 (5% × $500K) + $20,000 (10% × $200K) = $45,000. A $1,200,000 home requires $25,000 + $70,000 (10% × $700K) = $95,000. A $1,500,000 home requires $300,000 (the full 20%).
Below 5% down is generally not possible through conventional channels. Specialty programs like Skip the Down Payment offer pathways for credit-strong borrowers with no savings, but they work by structuring the down payment differently rather than eliminating the federal minimum.
Where can the down payment come from?
Lenders require documentation of your down payment source — they need to confirm it's not borrowed (with limited exceptions). Acceptable sources include: your own savings (verified by 90 days of bank statements), a gift from immediate family (verified by a signed gift letter and bank deposit), RRSP withdrawal under the Home Buyers' Plan (up to $35,000 per person, $70,000 for a couple), FHSA withdrawal (First Home Savings Account, up to $40,000), proceeds from selling your current home, and investment portfolio liquidation.
Borrowed down payments — from a line of credit, credit card, or personal loan — are usually not allowed under standard programs. Specific Flex Down programs explicitly accommodate borrowed down payments for credit-strong borrowers, treating the loan payment as an additional debt in the affordability calculation.
Cash gifts from non-family sources (friends, employers, business partners) are generally not acceptable. Gifts must come from a verifiable family member with a signed gift letter confirming no repayment is expected.
CMHC insurance and the 20% threshold
Down payments under 20% of the purchase price trigger mandatory mortgage default insurance — commonly called CMHC insurance, though it can also be provided by Sagen or Canada Guaranty. The premium is calculated as a percentage of your mortgage amount and ranges from approximately 2.8% to 4.0% depending on your down payment size.
Importantly, the premium gets added to your mortgage rather than paid upfront. So a 5% down on a $500,000 home means you're financing $475,000 plus roughly $19,000 in CMHC premium = $494,000 of actual mortgage. Your monthly payment is calculated on the $494,000.
At 20% down or higher, no mortgage insurance is required, and your mortgage is considered "conventional." Some lenders charge slightly higher rates on conventional mortgages because there's no insurance backing the loan, but that's usually offset by avoiding the premium entirely. Most borrowers come out ahead at 20% down — though the calculation depends on opportunity cost, since money tied up in a down payment isn't available for other purposes.
Should you put down more than the minimum?
There's no universally right answer. The math depends on opportunity cost, risk tolerance, and personal circumstances.
Arguments for a larger down payment: lower monthly payment, less total interest paid, potentially better rates (sometimes), faster path to debt-free homeownership, and crossing the 20% threshold to avoid CMHC insurance.
Arguments for the minimum down payment: keeps cash available for emergencies and renovations, lets you buy sooner (especially in appreciating markets where waiting costs more than the insurance premium), and frees up money for higher-return investments. The math on "is the home equity build-up better than my investment portfolio" depends entirely on rate environments and market returns.
The general consensus among mortgage specialists: in slow or normal real estate markets, larger down payments make sense. In hot or appreciating markets, getting in sooner with a smaller down payment usually beats saving for a larger one — by the time you've saved another $30,000 of down payment, the home you wanted has often gone up by $50,000.
First-time buyer programs and the down payment
Several federal programs help first-time buyers with down payment savings or access. The RRSP Home Buyers' Plan lets first-time buyers withdraw up to $35,000 from an RRSP (couples can each withdraw, totaling $70,000) without immediate tax consequences, repaid over 15 years.
The First Home Savings Account (FHSA) launched in 2023 — a registered account where contributions are tax-deductible (like an RRSP) but withdrawals for a first home are tax-free (like a TFSA). $8,000/year contribution limit, $40,000 lifetime cap. Both spouses can each have one.
The First-Time Home Buyer Incentive was discontinued in March 2024 — if older guides reference it, that program is no longer available. The other two programs above remain.