Minimum Down Payment Canada: The Complete Guide for First-Time Buyers

Saving for a down payment is typically the longest lead-time item in the home buying process — and making the wrong strategic choices about how to save, where to save, and how much to put down can cost you tens of thousands of dollars. This guide covers the federal down payment rules, explains CMHC insurance clearly, and walks through the best tools available to Canadian first-time buyers for accumulating their down payment efficiently.

Canada's Minimum Down Payment Rules

Canada's minimum down payment requirements are tiered based on purchase price and set by federal regulation:

• Purchase price under $500,000: Minimum 5% down payment required
• Purchase price $500,001 to $999,999: 5% on the first $500,000 plus 10% on the portion above $500,000
• Purchase price $1,000,000 or more: Minimum 20% down payment required — insured mortgages are not available above $1,000,000

These rules mean the minimum down payment scales with price. For common purchase prices in Ontario in 2026:

• $550,000 home: $27,500 minimum ($25,000 + $5,000)
• $700,000 home: $45,000 minimum ($25,000 + $20,000)
• $850,000 home: $60,000 minimum ($25,000 + $35,000)
• $999,999 home: $74,999.90 minimum ($25,000 + $49,999.90)

CMHC Mortgage Default Insurance: What It Costs and Why It Exists

Any purchase with less than 20% down requires CMHC mortgage default insurance. This insurance protects the lender — not you — in the event of default. Despite protecting the lender, you pay the premium, which is added to your mortgage balance and amortized over your full term.

The CMHC premium schedule as of 2026:

• 5.00%–9.99% down payment: 4.00% of the mortgage amount
• 10.00%–14.99% down payment: 3.10% of the mortgage amount
• 15.00%–19.99% down payment: 2.80% of the mortgage amount

On a $700,000 purchase with 5% down ($35,000), your insured mortgage is $665,000 and the CMHC premium is $26,600, bringing your total mortgage to $691,600. That $26,600 will cost you approximately $40,000–$45,000 in total by the time it's fully paid off with interest over a 25-year amortization.

The First Home Savings Account (FHSA): Canada's Most Powerful Down Payment Tool

The FHSA, launched in 2023, is genuinely one of the best financial tools the federal government has ever created for home buyers. It combines the best features of both the RRSP and the TFSA:

• Contributions are tax-deductible (like an RRSP) — reducing your taxable income in the year you contribute
• Withdrawals are tax-free when used for a qualifying first home purchase (like a TFSA)
• Annual contribution limit: $8,000 per year
• Lifetime contribution limit: $40,000 per account
• Unused room carries forward: If you contribute $5,000 in Year 1, you carry forward $3,000 to Year 2 for a total $11,000 room in Year 2
• Investments grow tax-free within the account

For a couple buying together, each partner can have their own FHSA — meaning a combined $80,000 in tax-free, tax-deductible savings capacity. Open your FHSA as early as possible: even if you are two years from buying, you are accumulating contribution room from the year you open the account.

The RRSP First Home Buyers' Plan (HBP)

The RRSP Home Buyers' Plan allows first-time buyers to withdraw up to $35,000 from their RRSP to use as a down payment — tax-free at the time of withdrawal. For a couple, that is $70,000 combined.

The key rules:

• Both you and your partner must be first-time buyers (defined as not having owned a principal residence in the past four years)
• The RRSP funds must have been in the account for at least 90 days before withdrawal
• The withdrawn amount must be repaid to your RRSP over a 15-year period, starting two years after withdrawal. If you do not repay in a given year, the missed amount is added to your taxable income for that year.
• The HBP can be used in combination with the FHSA — you can use both programs in the same purchase year

Gifted Down Payments

Many first-time buyers in Ontario receive partial or full down payment assistance as a gift from parents or family. Canadian lenders accept gifted down payments under specific conditions:

• The gift must come from an immediate family member (parent, sibling, grandparent, or spouse)
• A gift letter must be signed confirming the funds are a true gift with no expectation of repayment
• The funds must be in your account and visible on bank statements before the closing date (typically 30–90 days depending on the lender)
• The lender may require the gift to be received before or at pre-approval, not just at closing

If you are planning to use gifted funds, document everything carefully and work with a licensed mortgage agent who can guide the paper trail — improperly documented gifts are one of the most common reasons mortgage applications run into last-minute complications.

Non-Traditional Down Payment Sources: What Lenders Accept

Your down payment does not have to come solely from savings. Lenders also accept:

• Proceeds from the sale of a previous property
• RRSP HBP withdrawals (as described above)
• FHSA withdrawals
• Gifts from immediate family members
• Borrowed funds in some circumstances (though this increases your TDS ratio)
• Government grants and programs (available to certain eligible buyers)

What they do not accept without careful documentation: crypto proceeds (must be converted and seasoned in a bank account), funds from informal personal loans, or cash with no paper trail. If your down payment has an unusual source, raise it with your mortgage agent early — it is never a problem if there is time to document it properly.

How Much Should You Actually Put Down?

The minimum down payment gets you into the market. But the optimal down payment depends on your specific financial situation. As a general framework from jenny.mortgage:

1. If you can reach 20%, do it — the CMHC premium savings plus access to conventional products almost always justifies the additional wait
2. If 20% is not realistic on your timeline, 10%–19.99% offers meaningfully lower CMHC premiums than 5%–9.99%
3. The 5% minimum is a legitimate starting point if you have stable income, strong job security, and a clear plan for your financial situation going forward