Down Payments

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A down payment is the amount of money a buyer pays upfront when purchasing a home. The remainder of the purchase price is financed through a mortgage. Together, the down payment and mortgage equal the total purchase price of the property.

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Down payments are expressed as a percentage of the purchase price, and the minimum required amount is set by federal mortgage rules.

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Minimum Down Payment Requirements

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The minimum down payment depends on the purchase price of the home:

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• Homes priced at $500,000 or less
  Minimum down payment: 5% of the purchase price

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• Homes priced between $500,000 and $999,999
  Minimum down payment:

  • 5% on the first $500,000

  • 10% on the portion between $500,000 and $999,999

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• Homes priced at $1 million or more
  Minimum down payment: 20%

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Homes with a purchase price of $1 million or more are not eligible for insured mortgages and therefore require a minimum 20% down payment.

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Example:

If you purchase a home for $500,000 with a 15% down payment, your down payment would be $75,000, and your mortgage would be $425,000.

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How Your Down Payment Affects Your Mortgage

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The size of your down payment impacts:

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• The size of your mortgage

• Whether mortgage default insurance is required

• Your total borrowing costs over time

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If your down payment is less than 20%, mortgage default insurance is mandatory under federal rules.

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Mortgage Default Insurance (CMHC)

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In Canada, buyers who put down less than 20% are required to obtain mortgage default insurance, commonly referred to as CMHC insurance.

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This insurance protects the lender, not the borrower, in the event of default. The cost of the insurance is typically added to your mortgage, rather than paid upfront.

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CMHC Insurance Premium Rates (Current)

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Mortgage insurance premiums are calculated as a percentage of the mortgage amount and decrease as your down payment increases:

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• 5% to 9.99% down payment
  Insurance premium: 4.00%

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• 10% to 14.99% down payment
  Insurance premium: 3.10%

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• 15% to 19.99% down payment
  Insurance premium: 2.80%

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Mortgage default insurance is not required when your down payment is 20% or more.

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Important Ontario & Federal Notes

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• Mortgage default insurance is not available for homes priced at $1 million or more

• Insured mortgages must meet federal stress-test requirements

• Down payments must come from acceptable sources, such as:

  • Savings

  • RRSPs (via the Home Buyers’ Plan)

  • Gifted funds from immediate family (with documentation)

• Borrowed down payments are not permitted for insured mortgages

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Planning Your Down Payment

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Choosing the right down payment amount depends on your goals, cash flow, and long-term plans. In some cases, putting less than 20% down may make sense—even with insurance—while in others, a larger down payment may be more appropriate.

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Understanding your options early can help you plan confidently and avoid surprises during the purchase process.

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If you’re planning to buy a home in Ontario, we can help you determine the right down payment strategy and guide you through the mortgage rules that apply to your situation.