What is the minimum down payment?
- $500,000 or less: 5% of the purchase price.
- More than $500,000 but less than $1.5 million: 5% of the first $500,000, plus 10% of the remaining amount.
- $1.5 million or more: at least 20% of the full purchase price.
These rules apply to eligible owner-occupied purchases, including homes in Quebec and Ontario. Different requirements can apply to rental properties and properties with multiple units; a lender may also require a larger down payment based on your situation.
A $700,000 home: $45,000 down
For an eligible $700,000 purchase, the minimum down payment is calculated in two parts:
- 5% of the first $500,000 = $25,000
- 10% of the remaining $200,000 = $20,000
That makes the minimum $45,000, compared with $140,000 for a 20% down payment. The $45,000 does not include mortgage insurance, closing costs or your cash reserve.
What changes when you put down less than 20%?
You will typically need mortgage loan insurance. This protects the lender if you cannot make your payments. Its premium adds to your borrowing costs and can usually be added to the mortgage; if financed, it also accrues interest.
In Quebec, provincial tax applies to that insurance premium. The tax cannot be added to the mortgage and must be paid separately when you get the mortgage. Ontario also applies provincial tax, so the same budgeting point in the original question matters here too.
The down payment is only one part of qualifying
Having the minimum down payment does not automatically mean you qualify. Your income, existing debts and credit history matter, along with the property and the lender’s requirements.
Keep room in your budget for closing costs and the ongoing expenses of ownership. Before shopping, ask your mortgage professional for both the amount you can borrow and the cash you will need to complete the purchase.
Related: Does a mortgage pre-approval mean you are ready to make an offer?
Should you keep saving or buy with less?
Saving 20% means borrowing less and generally avoiding the mortgage insurance premium. Buying with a smaller down payment may also be possible, depending on your circumstances.
A mortgage professional can compare both options using your actual numbers, so you understand the payments and total costs before setting your budget. When we plan your West Island home search, that budget helps us focus on properties you can comfortably afford.
Official sources
- Canada.ca: How much you need for a down payment
- CMHC: General requirements for mortgage loan insurance