The federal minimum down payment rules

Canadian mortgage rules are set federally by the Office of the Superintendent of Financial Institutions (OSFI) and Canada Mortgage and Housing Corporation (CMHC). The minimum down payment is tiered by purchase price:

Up to $500,000: 5% minimum
$500,000 to $1,500,000: 5% on the first $500,000, then 10% on the portion above
Over $1,500,000: 20% minimum across the entire purchase price — no insured mortgages available

These tiers have been in place since 2016 with the $1.5M threshold updated in 2024 (it was previously $1M).

Worked examples by purchase price

$400,000 home

5% × $400,000 = $20,000 minimum down. Mortgage financed: $380,000. CMHC insurance applies (added to mortgage).

$720,000 home

5% × $500,000 = $25,000 + 10% × $220,000 = $22,000. Total: $47,000 minimum down. Mortgage financed: $673,000. CMHC insurance applies.

$1,000,000 home

5% × $500,000 = $25,000 + 10% × $500,000 = $50,000. Total: $75,000 minimum down. Mortgage financed: $925,000. CMHC insurance applies.

$1,500,000 home

5% × $500,000 = $25,000 + 10% × $1,000,000 = $100,000. Total: $125,000 minimum down. Mortgage financed: $1,375,000. CMHC insurance applies — this is the highest-priced home eligible for CMHC.

$1,500,001+ home

20% across the board — $300,000 minimum on a $1.5M home, $400,000 minimum on a $2M home. No CMHC insurance available; you're in the uninsured market.

The $1.5M threshold is a hard cliff. A $1,500,000 home needs $125,000 down; a $1,500,001 home suddenly needs $300,002 down. Plan offers carefully around that line.

What CMHC insurance does

If your down payment is less than 20%, you're buying with an insured mortgage. The lender requires Canada Mortgage and Housing Corporation (or a private equivalent like Sagen or Canada Guaranty) to insure the loan against borrower default.

The premium is paid by you, not the lender, but it's:

Calculated as a percentage of the mortgage amount (0.60% to 4.00% depending on loan-to-value)
Added to your mortgage principal — you don't pay it at closing, you amortize it over the loan term
A one-time charge — there's no annual renewal

Premium tiers (2026)

Up to 65% LTV: no premium
65-75%: 0.60%
75-80%: 1.70%
80-85%: 2.40%
85-90%: 2.80%
90-95%: 3.10%
95% LTV (5% down): 4.00%

PST on the premium in ON, QC, SK

Ontario, Quebec, and Saskatchewan apply provincial sales tax to the CMHC premium itself, paid at closing (not financed):

Ontario: 8%
Quebec: 9.975%
Saskatchewan: 6%

For a $50,000 CMHC premium in Ontario, that's $4,000 of PST you owe at closing. The down payment + CMHC calculator shows this line explicitly for your province.

Eligible sources of down payment

Lenders need to verify where your down payment came from. The fund source must be traceable and one of the accepted categories:

Your own savings

Standard. Lenders typically ask for 90 days of bank statements to confirm the funds have been in your account (so you didn't borrow them last week).

Sale proceeds from your current home

Common move-up scenario. Lenders will want to see the firm sale agreement and the lawyer's statement of adjustments showing funds clearing into your account.

FHSA, RRSP HBP, and TFSA withdrawals

The FHSA is the most powerful — see FHSA explained. The RRSP Home Buyers' Plan allows up to $60,000 per person; see RRSP HBP. TFSA can be withdrawn anytime without tax.

Gifts from immediate family

Parents, grandparents, siblings can gift you down payment money. You'll need a gift letter signed by the giver stating it's non-repayable. Lenders verify the giver's relationship and may verify they had the funds to give.

Loans (very limited)

Some lenders allow a borrowed down payment program where you finance the down payment with a personal loan. Rates are higher and qualification is stricter. Most A-tier lenders won't allow this.

What's NOT eligible

Cryptocurrency directly (must be converted to CAD and traced in your account)
Cash on hand without a paper trail
Loans secured against a future inheritance
"Cash-back" promotional funds from the lender (separately accounted for)

Why 20% down matters even if you can do less

A 20% down payment unlocks several benefits beyond avoiding CMHC:

Lower total cost

You save the CMHC premium (typically $5,000-$30,000 depending on home price), and any PST on it in ON/QC/SK.

Access to longer amortization

Insured mortgages typically max at 25-year amortization (with the new 30-year first-time-buyer-of-new-build exception). Uninsured mortgages with 20%+ down can go to 30 years standard.

Refinance flexibility

You can later refinance to take out equity (up to 80% LTV). Insured mortgages can't be refinanced to take cash out — only renewed for the same balance.

HELOC eligibility

Most home equity lines of credit cap at 65% LTV. The more equity you have, the more flexibility you have.

What if you have less than 5%?

You can't get a standard A-tier insured mortgage with less than 5% down. Options:

Wait and save. The mathematically optimal path for most first-time buyers.
Borrowed down payment programs. Some lenders (typically B-tier) allow this, with higher rates and stricter qualification.
Family gift / co-signer. A gift from immediate family with a signed letter is accepted.
Lease-to-own / rent-to-own. Niche programs where part of your rent applies to a future down payment. Read the contract carefully — many have predatory structures.

How to actually save the down payment

This is a financial planning problem with three levers: time, income, and expenses.

Time

The earlier you start, the more compound growth helps. A $300/month FHSA contribution for 5 years at 5% return = ~$20,000 saved plus ~$5,000 in growth plus ~$5,400 in tax refunds at a 30% marginal rate = $30,400 toward your down payment.

Income

Side income (freelance, second job) is the fastest lever for most renters. Every $1,000/month extra is $12,000/year directly into the FHSA bucket.

Expenses

Track 60 days of spending honestly. Most non-savers find $400-$800/month of expenses they didn't realize they had. Redirect those to FHSA + TFSA.

The single biggest accelerant for most first-time buyers is opening an FHSA the moment they're eligible — even if they only contribute $100/month at first. Lifetime contribution room only accrues from the date you open the account.

Common questions

What's the difference between "down payment" and "deposit"?

A deposit is the good-faith money you give the seller when your offer is accepted (typically 5-10% of price, held in trust by the seller's lawyer). A down payment is the full equity you contribute at closing. The deposit becomes part of the down payment on closing day.

Can I use my RRSP without paying the tax?

Yes — the Home Buyers' Plan lets you withdraw up to $60,000 tax-free if you're a first-time buyer, with a 15-year repayment schedule. See RRSP Home Buyers' Plan.

Do I need more than the minimum?

Strongly recommended. Beyond your down payment you need:

Land transfer tax (varies by province — none in AB/SK, $4k-$30k+ in ON/BC/QC)
Legal fees ($1,200-$2,500)
Title insurance ($200-$400)
Property tax + utility adjustments
Moving costs

A common rule of thumb: budget the minimum down payment plus 2-4% of home price for closing costs.

What if I lose my job between offer and closing?

You can't close. The lender will pull funding when they re-verify employment 24-48 hours before closing. This is why financing conditions on offers matter — they let you walk away without losing your deposit.

Can I use a co-signer to qualify with a smaller down payment?

A co-signer helps with qualification (their income + credit attach to yours), but doesn't reduce the down payment requirement. You still need the federal minimum down payment.

Bottom line

The minimum down payment is just the starting point. Run the math for your specific situation:

Down payment + CMHC calculator — exact minimum + premium + PST for your province
Land transfer tax calculator — closing-cost biggest line by province
Affordability calculator — how much home you actually qualify for under the stress test
Mortgage payment calculator — your monthly payment at any down payment level

How much down payment do I need for a Canadian mortgage in 2026?