Minimum Down Payment in Canada: How the Rules Work
The minimum down payment in Canada isn’t one flat percentage. It depends on the price of the home, and the rules work in tiers. Here’s how they work on an insured purchase, with some examples so you can see the math.
The three tiers
- 5% on the first $500,000 of the price
- 10% on the portion from $500,000 up to $1.5 million
- 20% on a purchase of $1.5 million or more
The 5% and 10% apply to the slice of the price in each range, not the whole price. That’s a detail that catches people off guard, because a $600,000 home does not need 10% down.
What that looks like in dollars
| Purchase price | Minimum down payment |
|---|---|
| $600,000 | $35,000 |
| $850,000 | $60,000 |
| $1,000,000 | $75,000 |
| $1,200,000 | $95,000 |
| $1,500,000 | $300,000 |
Here’s the math on the $600,000 home: 5% of the first $500,000 is $25,000, and 10% of the other $100,000 is $10,000. That’s $35,000 in total.
At $1.5 million and up, it’s 20% of the full price, which is why the jump from $1,200,000 to $1,500,000 is so large.
If you put down less than 20%
When your down payment is under 20%, mortgage default insurance is required. The premium is added to your mortgage, so it increases the amount you borrow. Putting down 20% or more avoids it.
Rentals, investment properties and multi-unit homes
If you’re buying a rental or investment property and you’re not living there, the minimum is 20% down.
For a home with more than one unit, the rules differ depending on the number of units and whether you’ll live in the property. If that’s what you’re looking at, ask before you start planning your numbers.
Closing costs are separate
Your down payment is not the only cash you need. Closing costs, including land transfer tax and legal fees, are separate and on top of your down payment. It’s worth planning for both from the start.
How much will you need?
The minimum is a starting point, and the right amount depends on your situation. If you’d like to know how much you’ll need to put down, connect with me at 249-480-1249 and let’s run the numbers.
This is one of the 10 things I cover in my monthly live session, Before You Buy: 10 Things Every Homebuyer Needs to Know. Save your spot here.
Call or text 249-480-1249.
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HumberBayMortgages.ca
Simon Browning | Mortgage Agent Level 2 | BRX Mortgage 13463
This content is for informational purposes only and does not constitute financial advice. Down payment rules, insurance requirements and lender policies change. Always consult a licensed mortgage professional before making decisions about your mortgage.