How Much Down Payment Do I Need in Canada?
Buying a home is exciting, but one of the first questions most Canadians ask is: how much down payment do I need? Your down payment affects the type of mortgage you qualify for, whether you need mortgage insurance, and your monthly payments. This guide breaks it all down for 2026 so you can plan confidently.
Minimum Down Payment Rules in Canada
The Canada Mortgage and Housing Corporation (CMHC) and other mortgage insurers set clear rules:
- Homes under $500,000: 5% minimum down payment
- Homes between $500,000 and $1,500,000: 5% on the first $500,000, 10% on the portion above $500,000
- Homes $1,500,000 or more: 20% minimum – no default insurance available.
These minimums apply whether you’re a first-time buyer or moving up to a new home. Keep in mind, if your down payment is less than 20%, you’ll need mortgage insurance through CMHC, Sagen, or Canada Guaranty.
For more on mortgage insurance rules, check the CMHC official site.
How Down Payment Affects Your Mortgage
Your down payment directly impacts your mortgage principal, which in turn affects your monthly payments and total interest paid.
- Higher down payment = lower mortgage balance → smaller monthly payments, less interest over time
- Lower down payment (<20%) → default insurance premiums apply, slightly increasing monthly costs
Example:
A $600,000 home with a 5% down payment ($30,000) requires CMHC insurance, whereas a 20% down payment ($120,000) avoids insurance entirely and reduces your monthly mortgage payment.
5 Tips for Saving Your Down Payment
Saving for a down payment can feel overwhelming, but a clear strategy helps:
- Automate savings: Set up a dedicated account and contribute monthly – don’t forget to save that tax return too!
- Use government programs: First-Time Home Buyer Incentive (these vary province to province), RRSP Home Buyers’ Plan, FHSA for First Time Buyers
- Reduce high-interest debt: Credit card or loan payments eat into savings potential (if your debt interest is higher than your savings interest – consider paying the debt off first)
- Cut back on non-essential spending: Dining out, subscriptions, and luxury purchases
- Side income: Freelance work or extra shifts can speed up your savings (but we can’t use this side income for qualification without 2 years of history of it on your tax return)
For more strategies, see our blog post on first-time homebuyer programs in Canada.
Down Payment and Lender Options
Many buyers don’t realize that how much down payment you have directly affects whether mortgage insurance is required, and your interest rate. Your down payment affects which lenders you can access and which rates they will offer you. A default insured mortgage gives the lender security. And, in turn, that security gives you a better interest rate.
- 5–19.99% down: Must be an insured mortgage (CMHC, Sagen, or Canada Guaranty). Insured mortgages include a default insurance premium on top of the mortgage.
- 20%+ down: Eligible for uninsured mortgages; more lenders, slightly higher rates, and more flexibility.
- High-value homes (>$1.5M): Require 20% down, no insurance available.
Additional Costs to Consider
Understanding how much down payment to save can help you plan your budget and avoid surprises at closing. Remember, your down payment isn’t the only upfront cost when buying a home:
- Closing costs: Legal fees, land transfer tax (depending on province), home inspection
- Property insurance and taxes: Required by lenders
- Moving expenses: Furniture, utilities, renovations
Planning for these costs ensures you don’t stretch your budget too thin.
Documents and Moving Money
When preparing to apply for a mortgage, your broker will need documents like recent pay stubs, bank statements, tax returns, and proof of down payment sources.
One critical tip: do not move large sums of money between accounts in the 3–4 months before applying. Lenders track deposits and transfers closely, and unexplained movements can delay or even derail approval. Plus – you’re going to have to provide 3 months of bank statements for EVERY.SINGLE.ACCOUNT that any deposits over $1k originated from.
If you’ve been saving, leave your funds in a clear, stable account and provide supporting documentation showing where the money came from. This keeps your file clean and your mortgage application smooth.
Takeaway
The key question — how much down payment do you need? — depends on your home price, loan type, and whether you qualify for mortgage insurance. While the minimums are clear, a larger down payment can save thousands over the life of your mortgage and increase your buying power.
If you’re ready to figure out the right down payment for your situation, talk to a licensed mortgage broker (like me!). We’ll review your numbers, explain your options, and help you plan a strategy that works with your income and lifestyle.