What is the minimum down payment in Canada?
**Canada has a tiered minimum down payment system based on the purchase price of the home.** For homes priced at $500,000 or less, the minimum is 5% of the purchase price. For the portion of the price between $500,001 and $1,499,999, the minimum is 10%. For homes priced at $1,500,000 or above, a full 20% down payment is required because CMHC mortgage insurance is not available at that price point.
This means the minimum down payment for a $600,000 home is not a flat 5%. It is 5% on the first $500,000 ($25,000) plus 10% on the remaining $100,000 ($10,000), for a total minimum of $35,000 or 5.83% of the purchase price.
The $1,500,000 insurable limit was increased from $1,000,000 in December 2024 as part of the federal government's housing affordability measures. This change opened up CMHC-insured mortgages to higher-priced homes for the first time, allowing buyers in expensive markets like Toronto and Vancouver to put as little as 5% down on homes up to $1,499,999.
| Purchase Price | Minimum Down Payment | Example |
|---|---|---|
| Up to $500,000 | 5% | $400,000 home = $20,000 down |
| $500,001 to $1,499,999 | 5% on first $500K + 10% on remainder | $750,000 home = $50,000 down (6.67%) |
| $1,500,000 and above | 20% | $1,800,000 home = $360,000 down |
How does CMHC mortgage insurance affect your costs?
**When your down payment is less than 20%, you are legally required to purchase mortgage default insurance from CMHC, Sagen, or Canada Guaranty.** The insurance premium is calculated as a percentage of the mortgage amount (not the home price) and is added directly to your loan balance. You pay interest on the premium for the life of the mortgage, which significantly increases its true cost.
The premium rate depends on your loan-to-value (LTV) ratio. A 5% down payment means a 95% LTV, which carries the highest premium rate of 4.00%. At 10% down (90% LTV), the rate drops to 3.10%. At 15% down (85% LTV), it falls to 2.80%. At 20% or more, insurance is not required at all.
On a $500,000 home with 5% down ($25,000), the mortgage is $475,000 and the CMHC premium is 4.00%, adding $19,000 to your loan for a total mortgage of $494,000. With 10% down ($50,000), the premium drops to $13,950. With 15% down ($75,000), it drops to $11,900. At 20% down ($100,000), you save the entire premium and your mortgage is $400,000.
The true cost of CMHC insurance is higher than the premium amount because you pay mortgage interest on it. A $19,000 premium financed over 25 years at 5% adds approximately $14,000 in interest, making the real cost around $33,000. This is why reaching 20% down is such a powerful financial goal.
| Loan-to-Value Ratio | CMHC Premium Rate | Premium on $475K Mortgage |
|---|---|---|
| Up to 65% | 0.60% | $2,850 |
| 65.01% to 75% | 1.70% | $8,075 |
| 75.01% to 80% | 2.40% | $11,400 |
| 80.01% to 85% | 2.80% | $13,300 |
| 85.01% to 90% | 3.10% | $14,725 |
| 90.01% to 95% | 4.00% | $19,000 |
How can the FHSA and HBP help with your down payment?
**The First Home Savings Account (FHSA), introduced in 2023, is the most tax-efficient tool for saving a down payment in Canada ([Canada.ca](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account.html)).** Contributions are tax-deductible (like an RRSP), growth is tax-sheltered, and qualifying withdrawals for a first home purchase are completely tax-free (like a TFSA). You get the best of both registered account types.
The annual FHSA contribution limit is $8,000, with a lifetime maximum of $40,000. Unused room carries forward up to $8,000 (so you can contribute up to $16,000 in year two if you contributed nothing in year one). The account must be open for at least one year before you can make a qualifying withdrawal. If you do not buy a home within 15 years of opening the account, the funds must be transferred to an RRSP or withdrawn (and taxed).
**The Home Buyers' Plan (HBP) lets you withdraw up to $60,000 from your RRSP tax-free for a down payment on your first home ([Canada.ca](https://www.canada.ca/en/revenue-agency/topics/about-canada-revenue-agency-cra/federal-government-budgets/budget-2024-fairness-every-generation/first-home-savings-account.html)).** The withdrawal limit was increased from $35,000 to $60,000 in the 2024 federal budget. You must repay the full amount to your RRSP over 15 years, starting the second year after the withdrawal.
A strategic combination of both programs can accelerate your down payment significantly. Contributing $8,000/year to an FHSA for 5 years gives you $40,000 (plus growth). Pairing this with a $60,000 HBP withdrawal from your RRSP provides $100,000+ toward a down payment, which is 20% on a $500,000 home, enough to avoid CMHC insurance entirely.
Strategies to save for a down payment faster
**Automate your savings on payday.** Set up an automatic transfer from your chequing account to a dedicated down payment savings account on the same day your paycheck arrives. Treating your down payment contribution like a non-negotiable bill removes the temptation to spend it. Even $500/month adds $6,000/year before any interest.
**Use a high-interest savings account (HISA) or GIC ladder.** Park your down payment savings in the highest-yield account available. As of 2026, several Canadian online banks offer HISA rates of 3% to 4.75%. For money you will not need for 12+ months, GICs paying 3% to 3.85% lock in a guaranteed rate. A GIC ladder (splitting your savings across 1-, 2-, and 3-year GICs) balances yield and liquidity.
**Reduce your largest expenses temporarily.** Housing and transportation typically consume 50%+ of take-home pay. Moving to a less expensive rental, taking on a roommate, or reducing car expenses for 2 to 3 years can redirect thousands of dollars per month to your down payment fund. A $500/month reduction in rent applied to savings adds $6,000/year.
**Leverage windfalls intentionally.** Tax refunds (especially from FHSA and RRSP contributions), bonuses, gifts, and side income should be directed immediately to your down payment savings. A $3,000 tax refund reinvested into your FHSA each year compounds significantly over a 5-year savings horizon.
- ✓Automate transfers on payday to remove temptation
- ✓Use a HISA at 3%+ or GIC ladder for guaranteed returns
- ✓Maximize FHSA contributions ($8,000/year) for tax-deductible, tax-free growth
- ✓Plan a $60,000 HBP withdrawal from your RRSP when ready to purchase
- ✓Redirect temporary expense reductions directly to savings
- ✓Reinvest tax refunds from FHSA/RRSP contributions
First-time home buyer programs and incentives in Canada
**Beyond the FHSA and HBP, several federal and provincial programs help first-time buyers with their down payment and closing costs.** The First-Time Home Buyer Tax Credit (HBTC) provides a $10,000 non-refundable federal tax credit, worth up to $1,500 in tax savings. It is claimed on your income tax return for the year you purchase the home.
The GST/HST New Housing Rebate provides a partial rebate of the GST or HST paid on a newly built home. For homes under $350,000, the federal rebate is 36% of the GST paid (up to $6,300). The rebate is gradually clawed back between $350,000 and $450,000. Some provinces offer additional provincial rebates on the provincial portion of the HST.
Provincial programs vary significantly. Ontario offers a Land Transfer Tax Refund of up to $4,000 for first-time buyers. British Columbia has a First Time Home Buyers' Program that eliminates the Property Transfer Tax on homes up to $500,000 ($835,000 for newly built homes). Alberta has no provincial land transfer tax at all.
Some municipalities offer additional grants or forgivable loans for first-time buyers. Check with your local municipality and province for the most current programs. These incentives can collectively save $5,000 to $15,000 on top of your down payment savings.
Worked example: saving for a $600,000 home with 10% down
**Step 1: Enter the home price.** You are looking at homes around $600,000 in your area.
**Step 2: Set your target down payment.** You want to put 10% down ($60,000) to reduce your CMHC premium from 4.00% (at 5%) to 3.10% (at 10%).
**Step 3: Enter your current savings.** You have $15,000 saved toward your down payment so far.
**Step 4: Set your monthly savings.** You plan to save $1,500/month from your combined household income.
**Step 5: Set the savings rate of return.** Your high-interest savings account pays 3.5% annually.
**Step 6: Review the results.** You need an additional $45,000 to reach your $60,000 target. At $1,500/month with 3.5% returns, you will reach your target in approximately 28 months (2 years and 4 months). Your CMHC insurance at 10% down will be $16,740 (3.10% of the $540,000 mortgage). The CMHC comparison table shows that saving an additional $40,000 to reach 20% down ($120,000) would eliminate the $16,740 CMHC premium entirely.
Frequently asked questions
How much down payment do I need for a $500,000 house in Canada?
**The minimum down payment for a $500,000 home is 5%, which is $25,000.** With 5% down, you will need CMHC mortgage insurance at 4.00%, adding $19,000 to your mortgage. With 10% down ($50,000), the premium drops to 3.10% ($13,950). With 20% down ($100,000), you avoid insurance entirely. The right amount depends on your savings, timeline, and how much you want to minimize your mortgage costs.
What is the minimum down payment for a house in Canada in 2026?
**The minimum is 5% for homes up to $500,000, 5% on the first $500,000 plus 10% on the remainder for homes between $500,001 and $1,499,999, and 20% for homes at $1,500,000 or above.** These rules are set by the federal government and apply nationwide. The $1,500,000 insurable limit was increased from $1,000,000 in December 2024.
Is it better to put 5% or 20% down on a house?
**Putting 20% down eliminates CMHC insurance (saving $15,000 to $40,000+ depending on home price), gives you lower monthly payments, and provides immediate equity.** However, waiting years to save 20% means paying rent longer and potentially missing out on home price appreciation. The right choice depends on your local market, savings rate, and financial goals. Use the calculator above to compare the total cost at different down payment levels.
What is CMHC mortgage insurance and when is it required?
**CMHC mortgage insurance (also called mortgage default insurance) is required whenever your down payment is less than 20% of the purchase price and the home is $1,500,000 or less.** It protects the lender (not you) if you default on the mortgage. The premium ranges from 0.60% to 4.00% of the mortgage amount and is added to your loan balance, where you pay interest on it for the life of the mortgage.
How much can I contribute to a First Home Savings Account (FHSA)?
**You can contribute up to $8,000 per year to an FHSA, with a lifetime maximum of $40,000 ([Canada.ca](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account.html)).** Unused contribution room carries forward up to $8,000. Contributions are tax-deductible and qualifying withdrawals for a first home purchase are completely tax-free. You must be a Canadian resident, at least 18, and have never owned a home to open an FHSA.
How much can I withdraw from my RRSP for a down payment under the HBP?
**The Home Buyers' Plan (HBP) allows you to withdraw up to $60,000 from your RRSP tax-free for a first home purchase.** The limit was increased from $35,000 to $60,000 in the 2024 federal budget. You must repay the full amount to your RRSP over 15 years, starting the second year after the withdrawal. If you do not repay on schedule, the unpaid portion is added to your taxable income for that year.
How long does it take to save for a down payment in Canada?
**It depends on the home price, your target down payment percentage, your savings rate, and investment returns.** For example, saving $1,000/month at 3% interest for a 5% down payment on a $500,000 home ($25,000) takes about 24 months. For 20% on the same home ($100,000), it takes about 7 years and 9 months. Pairing an FHSA ($8,000/year) with an HBP withdrawal ($60,000) can significantly shorten the timeline.
Can I use gifted money for a down payment in Canada?
**Yes, Canadian lenders accept gifted funds for a down payment, but the gift must come from an immediate family member (parent, sibling, or grandparent) and must be accompanied by a signed gift letter confirming the money is a true gift with no repayment expected.** The lender will ask for a paper trail showing the transfer from the gifter's account to yours. Some lenders require the gift to have been in your account for at least 15 to 90 days before closing.
What happens if I put less than 20% down on a home over $1,500,000?
**You cannot. Homes priced at $1,500,000 or above require a minimum 20% down payment because CMHC mortgage insurance is not available at that price point.** Without insurance, lenders require at least 20% down (a conventional mortgage). If you cannot afford 20% on a $1,500,000+ home, you would need to consider a less expensive property or save more before purchasing.
Does a larger down payment lower my mortgage interest rate?
**Not directly, but it can indirectly.** Your interest rate is primarily determined by the Bank of Canada overnight rate, your credit score, and the lender's pricing. However, CMHC-insured mortgages (under 20% down) sometimes receive slightly lower rates because the insurance protects the lender. Conventional mortgages (20%+ down) may have marginally higher rates but lower total cost because there is no insurance premium.