The down payment is the foundation of every purchase, and the rules around it are more nuanced than the '20% or pay insurance' shorthand suggests. The minimum depends on the purchase price, the source matters to lenders, and the size you choose changes your long-term cost in ways worth planning for.
The minimums by price tier
Canada uses a tiered minimum: 5% on the first $500,000, 10% on the portion above $500,000 up to $1.5 million, and 20% above $1.5 million. Below 20% you pay mortgage default insurance (CMHC or a private insurer), which is added to your mortgage — not paid out of pocket — but still costs you interest over the term.
Where the money can come from
Lenders verify and source every dollar. Acceptable sources include your own savings, an RRSP withdrawal under the Home Buyers' Plan, an FHSA, and a gift from an immediate family member with a signed gift letter confirming it's non-repayable. Borrowed down payments from a line of credit are sometimes allowed but add to your debt-service ratios and weaken the file.
Bigger isn't always better — but usually is
A larger down payment shrinks your mortgage, eliminates or reduces default insurance, and lowers your payment — but it also ties up cash that might earn more elsewhere or serve as an emergency buffer. The right size balances a comfortable payment against keeping liquid reserves intact. We model both so you don't drain your savings to save a few dollars a month.
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