How Much Down Payment Do You Need to Buy a Home in Canada?

Buying a home is one of the biggest financial decisions most Canadians will ever make. Whether you are a first-time homebuyer or returning to the market, understanding down payment requirements is essential. Your down payment directly affects your mortgage eligibility, the interest you pay, your monthly payment amount, and your long-term financial stability.

This guide explains exactly how much down payment you need in Canada in 2025, how lenders calculate the minimums, and what you can do if you do not have enough saved.

Minimum Down Payment Rules in Canada

Canada has strict down payment rules that apply to all residential mortgages. The required minimum depends on the price of the home.

Homes under $500,000

Minimum down payment: 5 percent

Example:

$400,000 home → Minimum down payment = $20,000

Homes between $500,000 and $999,999

Minimum down payment:

• 5 percent on the first $500,000

• 10 percent on the portion above $500,000

Example:

$700,000 home →

5% of $500,000 = $25,000

10% of remaining $200,000 = $20,000

Total minimum down payment = $45,000

Homes $1,000,000 and above

Minimum down payment: 20 percent

The government requires a higher down payment for high-value homes to reduce lending risk.

What About First-Time Home Buyers?

For first-time buyers, the minimum down payment is the same, but several programs are available to make buying a home more accessible. These include:

• First-Time Home Buyers’ Incentive

• Home Buyers’ Plan (RRSP withdrawal)

• GST/HST rebates

• Provincial first-time buyer credits

These programs can reduce closing costs or help with the effective down payment.

When You Must Put 20 Percent Down

A 20 percent down payment is required when:

• The home price is $1,000,000 or more

• You are applying for a rental or investment property

• You do not meet mortgage insurer requirements

• You want to avoid mortgage insurance premiums

Many buyers aim for 20 percent to reduce monthly costs, but it is not mandatory for most residential homes under $1 million.

Mortgage Default Insurance (CMHC, Sagen, Canada Guaranty)

If your down payment is less than 20 percent, you must purchase mortgage insurance. Many Canadians misunderstand this—it does not protect the homeowner, but rather the lender in case of default.

Premiums depend on your down payment:

• 5% down → highest premium

• 10% down → lower premium

• 15% down → even lower

The premium is added to your mortgage and paid over time, not upfront.

How Down Payment Affects Your Mortgage Approval

Lenders consider several factors when determining how much down payment is needed for approval. These include:

Your credit score

A higher score may allow for lower down payment flexibility.

Your debt-to-income ratio

If you have high debt, lenders may require more than the minimum.

Your income stability

Applicants with variable or seasonal income may need a larger down payment.

Property type

Condos often have different requirements from freehold homes.

Mortgage rules

Lenders must follow federal underwriting guidelines, which consider risk factors beyond the basic minimum.

What If You Do Not Have Enough Down Payment?

Many Canadians struggle to save enough due to rising living costs and rent increases. If you do not have the minimum required, consider the following:

Reduce or consolidate debt

High debt payments reduce mortgage approval amounts. Lowering debt can significantly increase eligibility.

Join a credit rebuilding program

Improving your credit score can help you qualify for lower down payment options.

Explore government programs

RRSP withdrawals, incentives, and tax credits may help bridge the gap.

Delay the purchase and rebuild credit

Many individuals can improve their mortgage eligibility within 2–6 months with a structured plan.

Work with a mortgage or credit specialist

A professional can help you understand your numbers and prepare for approval.

How Your Credit Score Impacts Your Down Payment

A low credit score does not automatically increase the minimum down payment, but it can:

• Limit the lenders willing to approve you

• Increase interest rates

• Require additional conditions

• Reduce the maximum mortgage amount

Many Canadians choose to rebuild their credit first, then apply for a mortgage to avoid higher costs.

Down Payment for Borrowers With Bad Credit

If your credit score is low, the minimum down payment rules still apply but your lender options become limited. Some alternative lenders may require:

• 10 percent down

• 15 percent down

• 20 percent down

This is why many people choose to improve their credit for a few months before applying.