Minimum Down Payment in Canada: How Much You Need

The federal minimum down payment is tiered by purchase price, and any down payment below 20% means the mortgage must be insured. Here is how the rule works.

By Promissory.ca Editorial Team Reviewed against official Canadian sources Last updated: 2026-09-16

What a down payment is

A down payment is the portion of the purchase price you pay from your own funds rather than borrowing. It reduces the size of the mortgage you need and proves to the lender that you have a stake in the property. The larger the down payment, the smaller the loan, the lower the interest cost over time, and the more equity you hold from day one.

In Canada the minimum down payment is set by federal rule for mortgages from federally regulated lenders. That rule is tiered, which means the percentage you must put down depends on how expensive the home is.

The federal minimum is tiered by price

The minimum is not one flat percentage. It steps up as the purchase price rises, so the required percentage on the upper portion of an expensive home is higher than on a modest one.

The tiers apply to portions of the price, not to the whole amount. As an illustration, on a home priced at $600,000 the minimum would be 5% on the first $500,000 plus 10% on the remaining $100,000. On a home priced above $1,500,000, the minimum is 20% of the entire price.

These are the federal minimums for federally regulated lenders. Some provincial credit unions and private lenders operate under different rules, so the floor can differ depending on who you borrow from.

When default insurance applies

If your down payment is below 20% of the purchase price, the mortgage is considered high ratio and must be insured against default. Mortgage default insurance protects the lender if you stop paying; it does not protect you. The cost is typically passed on to you, either as a premium added to your mortgage balance or paid upfront, and the premium is higher when your down payment is smaller.

Once you reach a 20% down payment, the mortgage is conventional and the insurance requirement generally falls away. That is why 20% is a common target for buyers, since it removes an added cost and can improve the rate you are offered.

Amortization limits for insured mortgages

Under OSFI Guideline B-20, the maximum amortization for a high-ratio insured mortgage is 25 years. Longer amortizations may be available on uninsured mortgages, depending on the lender. A longer amortization lowers the payment but increases the total interest paid, so the trade off is between monthly breathing room and long term cost.

Where the down payment can come from

Lenders want to see that your down payment is genuinely yours or properly documented. Common sources include savings, the proceeds from selling a previous home, investments, and funds gifted by an immediate family member. Borrowed money is usually not accepted as a down payment, because it adds to your debt load rather than reducing it.

Lenders typically ask for a history of the funds, often going back a few months, to confirm they were not borrowed. If a large sum appears suddenly, be ready to explain and document it. Keeping your down payment in one account for several months makes that trail easy to follow.

Gifted down payments

A gift from a family member is a legitimate source, but it must be documented. Lenders usually ask for a signed letter confirming the gift, stating that it does not need to be repaid, along with proof that the funds arrived. Some lenders also want to see the money in your account before closing. Treat the gift as a genuine transfer, not a loan dressed up as one, because misrepresenting it is a form of fraud.

How down payment size changes your cost

A bigger down payment does three things at once. It lowers the amount you borrow, which reduces the interest you pay. It may remove the insurance premium. And it lowers the loan to value ratio, which can earn you a better rate and improve your odds of approval. In a competitive market, a larger down payment also strengthens your offer because there is less financing risk for the seller.

The reverse is also true. A small down payment means a bigger loan, a longer path to building equity and, in many cases, an insurance premium added to the balance. None of that makes a low down payment wrong, but it does raise the long term cost.

Saving for a down payment

Building a down payment is a matter of time and consistency. Automating a transfer to a dedicated savings account each payday turns a large goal into a series of small, steady steps. Cutting high interest debt first often frees up more cash each month than a modest cut to spending, because interest payments are money that never builds your equity.

Set a target based on the price range you are actually shopping in, then add a buffer. Real estate markets move, and a target that was realistic a year ago may need adjusting.

Down payment is not the only upfront cost

Buyers often focus on the down payment and forget that closing costs come out of the same savings. Land transfer tax, legal fees, title insurance, an appraisal and adjustments for prepaid property taxes all fall due around the closing date. Budget for those separately so your down payment is not quietly eroded. For a full list, see our guide to closing costs when buying a home in Canada.

Common misunderstandings

Three myths come up again and again. The first is that you always need 20% down. You do not, though below 20% triggers insurance. The second is that the minimum is a flat 5%. It is tiered, so the percentage rises with price. The third is that the down payment can be borrowed. It generally cannot, and trying to disguise a loan as savings can put your approval and your legal position at risk.

Promissory.ca is not a lender or a mortgage broker and charges consumers no fee; it may receive compensation from lending partners. A licensed mortgage professional can confirm the exact minimum that applies to your situation and lender.