When you’re ready to embark on the exciting journey of purchasing a new home, one of the most crucial factors to consider is the down payment. Understanding how much you need to put down for your dream house is vital to ensure you are financially prepared for this significant investment. In this guide, we will explore the ins and outs of down payments on houses in Canada, including the minimum requirements, mortgage loan insurance, and helpful home-buying programs. Let’s dive in!


What is a Minimum Down Payment?

A down payment is the initial amount of money you contribute towards purchasing a home. The lender deducts this down payment from the total price of the property, and you take out a mortgage to cover the remaining balance. The minimum down payment varies depending on the purchase price of the home:

For homes priced at $500,000 or less, the minimum down payment is 5% of the purchase price.

For homes priced between $500,000 and $999,999, the minimum down payment is 5% of the first $500,000 and 10% for the portion above $500,000. For homes priced at $1 million or more, the minimum down payment is 20% of the purchase price. If you’re self-employed or have a poor credit history, your lender may require a larger down payment. It’s generally advisable to save for a down payment and minimize your debts to ensure financial stability.

Understanding Mortgage Loan Insurance:

Mortgage loan insurance, also known as mortgage default insurance, safeguards the mortgage lender in case you cannot make your monthly mortgage payments. It is a requirement if your down payment is less than 20% of the purchase price of the home. However, even with a 20% down payment, the lender might still ask you to obtain mortgage loan insurance under certain circumstances, such as being self-employed or having a poor credit history.


The mortgage loan insurance premium ranges from 0.6% to 4.50% of the mortgage amount and is based on the size of your down payment. The larger your down payment, the lower the premium you pay. You can either pay the premium upfront or add it to your mortgage, in which case you will pay interest on the premium.

How the Down Payment Affects Your Mortgage Cost:

Saving for a larger down payment can have a significant impact on the total cost of your mortgage. A bigger down payment means a smaller mortgage, resulting in lower monthly payments and saving thousands of dollars in interest charges over the life of your mortgage.

Home Buying Programs and Incentives:        

To assist you in coming up with a down payment, there are several home-buying programs and incentives available in Canada:

  • Home Buyers’ Plan (HBP): If you’re a first-time homebuyer, you may be eligible for the HBP, which allows you to withdraw up to $35,000 tax-free from your Registered Retirement Savings Plan (RRSP) to buy or build a qualifying home. You have up to 15 years to repay the withdrawn amount.
  • First-Time Home Buyer Incentive: This program offers a shared equity mortgage with the Government of Canada for first-time home buyers. The government provides financing without interest, reducing monthly mortgage payments without increasing the down payment. The incentive’s repayment is required after 25 years or when the property is sold, without any prepayment penalties.


Calculating the Down Payment for a House:

The down payment is calculated as a percentage of the total purchase price of the home. For homes priced below $500,000, the minimum down payment is 5%. For homes between $500,000 and $999,999, it is 5% of the first $500,000 and 10% of the remaining amount. For homes priced at $1 million or more, the minimum down payment is 20%.


Is a Down Payment the Same as a Deposit?

The down payment is not the same as the deposit. The deposit is a smaller amount paid upfront when making an offer to purchase the property and is later deducted from the required down payment.

Saving for a down payment can be a significant obstacle for homebuyers, especially in expensive housing markets. Some tips for saving include setting a specific savings goal, setting up automatic withdrawals, and cutting back on optional spending.



A down payment is a crucial aspect of buying a home, and the amount required depends on various factors. Understanding the minimum down payment requirements, mortgage loan insurance, and available home-buying programs can help you plan for your dream home. Whether you’re starting to save or ready to take the plunge, working with experienced real estate professionals will guide you through the process and make your homeownership dreams a reality. Remember that purchasing a home is a significant milestone, so take the time to plan and ensure you’re financially prepared for this exciting journey.