Minimum Down Payment in Canada

For an owner-occupied home, FCAC currently states the minimum down payment as 5% of the purchase price up to $500,000; 5% of the first $500,000 plus 10% of the portion above $500,000 for homes below $1.5 million; and 20% for a home priced at $1.5 million or more.

The federal insured-mortgage price cap increased from $1 million to $1.5 million effective December 15, 2024. A buyer should still confirm that the borrower, property and transaction meet the insurer and lender’s other requirements.

For a $600,000 purchase: 5% of $500,000 is $25,000, plus 10% of the remaining $100,000 is $10,000. Minimum down payment = $35,000.

For a $900,000 purchase: $25,000 + 10% of $400,000 = $65,000. For a $1.4 million purchase: $25,000 + 10% of $900,000 = $115,000. At $1.5 million, the rule changes: 20% is $300,000.

Use the Down Payment Planner beside these calculations rather than doing the tiered formula manually every time.

A purchase with less than 20% down will generally require mortgage default insurance when it falls within the insured framework. The insurance protects the lender, not the borrower, and the premium is usually added to the mortgage balance.

That means the buyer’s cash down payment and the final registered/advanced mortgage are not simply purchase price minus cash. Use the CMHC Insurance Calculator and Mortgage Default Insurance for the premium mechanics.

HopeWell separates program minimum, lender-required equity and borrower-chosen equity. The first is the lowest amount permitted by the relevant framework. The second can be higher because the lender will not accept the transaction at maximum LTV. The third is the amount the borrower deliberately chooses after considering payment, liquidity and future plans.

A buyer with weak credit, an unusual property, foreign income, a portfolio of rentals or a lender-specific program may therefore need more equity than the headline minimum even though the purchase price itself would allow a smaller amount.

The lender underwrites against the value it accepts. If the purchase price is $900,000 but the lender accepts only $850,000, the loan may be constrained by the lower value. The buyer may have to contribute additional cash even though the legal purchase price has not changed.

This is why Loan-to-Value and Appraisal Shortfall belong in the down-payment discussion. HopeWell’s Mississauga pre-construction case shows how an appraisal gap can create a separate equity problem that has to be structured without destroying qualification.

More down payment can reduce the mortgage and sometimes the insurance premium, but it also converts liquid cash into home equity. A borrower who closes with no emergency reserve can become financially fragile immediately after taking possession.

Use Borrower Liquidity and the Closing Cost Calculator. The useful question is not “How much can I put down?” but “How much can I put down while still funding closing and preserving enough liquidity for the first year?”

Compare each option across six dimensions: mortgage size, insurance premium, monthly payment, qualification, cash left after closing and future flexibility. The mathematically smallest mortgage is not automatically the safest household balance sheet.

Run at least three scenarios in the Down Payment Planner: minimum permitted, the amount that gets you to the next meaningful insurance/LTV threshold, and the maximum you are comfortable contributing while preserving reserves.

Below $1.5 million, the tiered insured-purchase minimum can apply when the borrower and property otherwise qualify. At $1.5 million or more, FCAC’s current table requires 20% down. That is not a gradual step: a $1.49 million purchase and a $1.50 million purchase can require dramatically different minimum cash.

Before negotiating near the threshold, run the Down Payment Planner. A slightly higher purchase price can change not only the mortgage amount but the entire equity structure.

At 20% down, a standard owner-occupied purchase is generally in conventional/uninsured territory rather than requiring borrower-paid mortgage default insurance. That can change insurer involvement, lender funding economics and product options.

But 20% down does not guarantee approval. The lender still assesses income, debts, credit, property, source of funds and the rest of the file. Some properties or borrower profiles can require more than 20% with a particular lender. See Conventional Mortgage Down Payment.

The first dollars of down payment may be essential because they make the purchase eligible. Additional dollars can reduce the mortgage and sometimes improve insurance pricing or qualification. Beyond that, each extra dollar may simply trade liquid savings for illiquid home equity.

HopeWell compares mortgage reduction per dollar with liquidity lost per dollar. If an extra $50,000 down saves a manageable monthly amount but eliminates the emergency reserve, the lower mortgage may not create the stronger household.

Mortgage structures are constrained by the lender/insurer’s accepted transaction or lending value. A buyer cannot create extra borrowing capacity by simply paying more than the property supports.

When accepted value is below the purchase price, the extra difference usually has to come from the buyer rather than being financed inside the normal maximum LTV. This is why valuation risk belongs in a down-payment plan before the financing condition is waived.

The minimum exists to define the lowest permitted equity for an eligible transaction. It does not say that minimum leverage is suitable for every household.

Stress the purchase at higher rates, include closing costs and preserve a reserve. If the minimum down payment leaves the household with no buffer, a lower purchase price or larger savings period can be the stronger financing decision.