Down payment: from 5% to 20%
Understand minimum rules, CMHC insurance, the FHSA, and the HBP — what you need to make the most of your upfront investment.
Rules in Canada
The minimum down payment is not a single percentage — it is tiered based on the purchase price.
Up to $500,000
Minimum 5% of the total price.
$500,000 to $1,499,999
5% on the first $500,000 + 10% on the remainder.
$1,500,000 and above
Minimum 20% required — CMHC insurance is not available.
Example — Home at $650,000
How your down payment affects cost
The more you put down up front, the less you pay over time. Comparison for a $400,000 loan.
5%
Minimum — most accessible
- warningCMHC (default) insurance required
- paymentsHigher monthly payments
- trending_upHighest total interest
CMHC premium
4.00% of loan
10%
The middle ground
- check_circleLower CMHC premium
- balanceBalance between monthly payment and cash saved
- savingsStronger starting equity
CMHC premium
3.10% of loan
20%
Ideal financially
- verifiedNo CMHC premium
- money_offLowest monthly payments
- keyboard_double_arrow_downLowest total borrowing cost
CMHC premium
$0
Programs to help you save your down payment
The Government of Canada offers special programs for first-time buyers.
FHSA
New in 2023The First Home Savings Account combines features of an RRSP and a TFSA. Contributions are tax-deductible, and withdrawals (contributions + growth) are tax-free when used to buy a qualifying first home.
- check_circleAnnual contribution: $8,000
- check_circleLifetime limit: $40,000
- check_circleTax deduction on contributions
- check_circleQualifying withdrawals are tax-free
HBP — Home Buyers’ Plan
The HBP lets you withdraw up to $60,000 from your RRSP (per person) to fund your down payment without immediate tax. Amounts withdrawn must be repaid to your RRSP over 15 years. (Limit increased from $35,000 to $60,000 as of April 16, 2024.)
- check_circleMax withdrawal: $60,000 per person
- check_circleCouple: up to $120,000 combined
- check_circleRRSP contributions must be in account 90 days before withdrawal
- check_circleRepayment over 15 years
- check_circleExtended 5-year grace period for withdrawals made between 2022 and 2025
FHSA + HBP: These programs are not mutually exclusive. A first-time buyer can use both an FHSA and an HBP withdrawal to maximize a down payment. Talk to a tax professional to optimize your plan.
Understanding CMHC insurance
Mortgage default insurance (often called CMHC insurance, though other insurers exist) is required when your down payment is under 20%. It protects the lender; the borrower pays the premium.
What it does
It protects the lender if you default. In return, you can access competitive rates with as little as 5% down.
The cost
The premium is usually added to your mortgage: 4.00% (5% down), 3.10% (10%), 2.80% (15%). On a $400,000 loan at 5% down, that is about $16,000 added to the mortgage.
30-year amortization
As of December 15, 2024, all first-time buyers can amortize their insured mortgage over 30 years — not just for new construction. This lowers monthly payments but increases total interest paid over time.
Questions about your down payment?
Write to us — we can help you think through your situation and next steps for your situation.