In Canada, the minimum down payment is generally 5% on the first $500,000 of a home's purchase price and 10% on the portion above that — though rules and the insured-mortgage price cap change, so always confirm current requirements with a licensed mortgage professional. A down payment is the upfront share of the purchase price you pay yourself, with the rest covered by your mortgage. A 20% down payment lets you avoid mortgage default insurance. This guide breaks down how much you may need in BC and where those funds can generally come from.
What Is a Down Payment?
Your down payment is the portion of the home's purchase price that you pay upfront, out of pocket. The rest is covered by your mortgage. The size of your down payment determines your loan-to-value ratio — essentially, how much of the home the bank is financing versus how much is yours from day one.
The bigger your down payment, the smaller your mortgage, and the less you'll pay in interest over time. But you don't need to put down 20% to buy a home in Canada — not even close.
What Are the Minimum Down Payment Requirements in Canada?
Here's how the minimums work, broken down by purchase price:
Homes under $500,000: Minimum 5% down
Homes between $500,000 and $999,999: 5% on the first $500,000, plus 10% on the portion above $500,000
Homes $1,000,000 and over: Minimum 20% down — no exceptions
So if you're buying a $450,000 home, the minimum down payment is $22,500. That's a lot more achievable than the $90,000 that a 20% requirement would demand.
What's the Catch With Less Than 20% Down?
When your down payment is less than 20%, your mortgage is considered "high-ratio" and you're required to purchase mortgage default insurance through CMHC (Canada Mortgage and Housing Corporation). This insurance protects the lender — not you — if you default on the loan.
The premium is calculated as a percentage of your mortgage amount and added directly to your mortgage balance. Here's how it breaks down:
5–9.99% down: 4.00% premium
10–14.99% down: 3.10% premium
15–19.99% down: 2.80% premium
On a $400,000 home with 5% down, that's a premium of roughly $15,200 added to your mortgage. It increases your total borrowing cost, but it also makes homeownership accessible years earlier than waiting to save 20% would.
Whether that trade-off makes sense depends on your individual situation — and it's a conversation worth having with your mortgage broker.
Where Can Your Down Payment Come From?
Lenders want to know where your down payment money is coming from — not to be nosy, but to verify that it's legitimate and not a loan that would affect your debt ratios. Acceptable sources include:
Personal savings: The most straightforward source. Lenders typically want to see 90 days of bank statements showing the funds.
RRSP Home Buyers' Plan (HBP): First-time buyers can withdraw up to $35,000 from their RRSP (or $70,000 combined for a couple) tax-free to use toward a home purchase. You have 15 years to repay it.
First Home Savings Account (FHSA): A newer and genuinely excellent tool for first-time buyers. You can contribute up to $8,000/year to a maximum of $40,000, and withdrawals for a qualifying home purchase are completely tax-free — no repayment required.
Gift from an immediate family member: Many lenders accept gifted down payments from parents or close family. There's typically a gift letter required confirming the funds don't need to be repaid.
Proceeds from a sale or other asset: If you're selling a vehicle, investments, or other property, those proceeds can be used.
A Note on the FHSA
If you're a first-time buyer who hasn't opened a First Home Savings Account yet, this is worth paying attention to. The FHSA combines the best features of an RRSP and a TFSA — contributions are tax-deductible, and qualifying withdrawals are tax-free. It's one of the most powerful savings tools the government has introduced for first-time buyers in a long time.
Even if you're not ready to buy today, opening the account now starts your contribution room accumulating. Talk to your financial advisor or bank about getting this set up.
So, How Long Will It Take to Save?
That depends on your income, your expenses, and the price range you're targeting. But here's a framework that helps: work backward from your target down payment amount, subtract what you've already saved, and divide by what you can realistically put away each month.
If the timeline feels discouraging, consider whether the FHSA, the HBP, or a family gift could help close the gap. A lot of first-time buyers are closer to ready than they think.
What is a down payment?
A down payment is the portion of a home's purchase price that you pay upfront from your own funds — the rest is financed through your mortgage. For example, on a $400,000 home, a 5% down payment would be $20,000, and your mortgage would cover the remaining $380,000. The larger your down payment, the less you borrow and the less interest you pay over time (confirm current rules with a licensed mortgage professional).
How much down payment do I need to buy a home in BC?
In Canada, the general minimum is 5% on the first $500,000 of the purchase price and 10% on the portion above that, up to the insured-mortgage price cap — purchases above that cap require at least 20% down. These thresholds and the insured price cap can change; confirm the current requirements and your eligibility with a licensed mortgage professional before you budget.
Do I need 20% down?
No — 20% is not required in most cases, but it does allow you to avoid paying for mortgage default insurance (sometimes called CMHC insurance). If your down payment is less than 20%, your lender will require mortgage default insurance, which protects the lender and adds a premium to your mortgage balance. Whether putting 20% down makes sense depends on your savings, timeline, and goals (confirm with a licensed mortgage professional).
What is mortgage default insurance (CMHC)?
Mortgage default insurance — often called CMHC insurance after the Canada Mortgage and Housing Corporation — is required when a buyer puts down less than 20% of the purchase price. It protects the lender, not the buyer, if the borrower defaults. The premium is calculated as a percentage of the insured mortgage amount and is typically added to the mortgage balance rather than paid upfront. Premium rates and qualifying criteria can change; confirm current figures with a licensed mortgage professional.
Can I use my RRSP or FHSA for a down payment?
Generally, yes. First-time buyers may be able to use the federal Home Buyers' Plan (HBP) to withdraw from their RRSP toward a down payment, and the First Home Savings Account (FHSA) was created specifically to help first-time buyers save tax-free for a home purchase. Contribution limits, withdrawal conditions, repayment rules, and eligibility criteria for both programs can change — confirm the current rules and how they apply to your situation with a licensed mortgage professional or financial advisor.
Can a down payment be a gift?
In many cases, yes — mortgage lenders in Canada generally allow down payment funds to come from a gift from an immediate family member, and the lender will typically require a signed gift letter confirming the funds do not need to be repaid. Rules about acceptable gift sources vary by lender and insurer and can change; confirm what your lender requires with a licensed mortgage professional.
Casie Schellenberg is a REALTOR®, not a mortgage broker. Down-payment rules and insured-mortgage limits change — confirm exact figures and your eligibility with a licensed mortgage professional.
Comments:
Post Your Comment: