WHAT’S AN ACCEPTABLE DOWN PAYMENT FOR A HOUSE?

Ask ten homeowners this question and you’ll get ten different answers — some will insist on 10%, others will swear you need 20%. But in Canada, the rules are clearly defined, and the minimum down payment may be lower than you think.

See how down payment requirements actually work — and how they impact your approval and affordability. 👇

Understanding the minimum rules, premium tiers, and cost differences helps you plan smarter and avoid expensive surprises.

1️⃣ The Minimum Down Payment in Canada Is 5%

Today, you can buy a home with as little as 5% down.

✔️ $200,000 purchase = $10,000 minimum

✔️ lower entry cost for first-time buyers

✔️ increases accessibility to homeownership

This is possible because of mortgage default insurance programs offered through CMHC and other insurers.

2️⃣ CMHC Made 5% Down Possible

Before CMHC existed, Canadians needed 20% down.

✔️ CMHC was created in 1946

✔️ provided insurance to protect lenders

✔️ allowed lower down payments and lower rates

CMHC guarantees lenders against borrower default, making low-down-payment mortgages feasible.

3️⃣ Your Credit Can Affect Your Required Down Payment

Not all buyers qualify for the minimum 5%.

✔️ limited credit history

✔️ past late payments

✔️ higher perceived risk

These situations may require a 10% down payment instead of 5%, depending on insurer guidelines.

4️⃣ More Down Payment = Lower Monthly Costs

Increasing your down payment reduces several expenses.

✔️ lower monthly mortgage payments

✔️ lower insurance premiums

✔️ less interest paid over time

A larger down payment strengthens your overall financial position.

5️⃣ How CMHC Premiums Work

Insurance premiums depend on the size of your down payment.

✔️ 5% down → premium approx. 4%

✔️ 10% down → premium approx. 3.10%

✔️ 20% down → no premium at all

On a $400,000 home, a 5% down payment results in a premium close to $16,000 — built into the mortgage balance.

6️⃣ You Can Combine Multiple Sources for Your Down Payment

Down payments can come from more than just savings.

✔️ bank or savings account

✔️ RRSP under the Home Buyers’ Plan

✔️ gift from immediate family

✔️ accumulated savings over time

Mixing sources can help you reach 20% faster and eliminate insurance costs entirely.

💬 Final Thought

The right down payment depends on your finances, credit history, and long-term goals — but understanding how minimums, premiums, and affordability work will put you in control of the process from the start. Saving more upfront can dramatically reduce long-term costs, but even a 5% down payment can open the door to homeownership.

If you’d like us to calculate your minimum required down payment and explore your financing options, send The Frontline Mortgage Group a message anytime.