How much down payment do I need?
The minimum a Canadian lender can accept at a given price, what insurance it triggers, what the premium adds to the loan, and what is left of your savings once closing costs are paid.
What you are looking to pay.
Everything you can put towards the purchase, including closing costs.
Only used to show what the premium costs you in interest.
Minimum down payment
$40,000
6.2% of $650,000. With closing costs you need about $44,670 in total.
- Your down payment
- $100,000
- Mortgage
- $565,400
- Insurance premium
- $15,400
- Short by
- $4,670
| Down payment | $100,000 |
|---|---|
| Closing costs | $4,670 |
| Cash needed on closing day | $104,670 |
| Savings available | $100,000 |
| Shortfall | $4,670 |
| 10% down, $65,000 at 3.10% of the loan | $18,135 |
|---|---|
| 15% down, $97,500 at 2.80% of the loan | $15,470 |
| 20% down, $130,000 | No premium |
The premium is added to the mortgage rather than paid at closing, so you pay interest on it for the whole amortization. Reaching twenty per cent removes it entirely, which is why the gap between the fifteen and twenty per cent rows above is usually larger than it looks.
The minimum, and how it is worked out
The minimum down payment in Canada is marginal rather than flat. It is five per cent of the first $500,000 of the price, ten per cent of the portion between $500,000 and $1.5 million, and twenty per cent of the whole price from $1.5 million upward. So a $650,000 home needs $25,000 on the first slice and $15,000 on the next, which is $40,000 rather than the $32,500 a flat five per cent would suggest.
The $1.5 million line is not a tier, it is a cliff. Mortgage default insurance is not available at or above that price at all, so twenty per cent stops being a threshold you cross and becomes a floor you must reach. The cap was $1 million until December 2024.
What the premium actually costs
Below twenty per cent down your mortgage is insured, and the premium is a percentage of the loan that steps as the loan-to-value rises: 2.80% just above eighty per cent, and 4.00% at the five per cent down floor. It is normally added to the mortgage rather than paid in cash, which means it is borrowed, and you pay interest on it for twenty-five years.
There is a second cost that is easy to miss. Ontario, Quebec and Saskatchewan charge provincial sales tax on the premium, and that tax cannot be financed. It has to be found in cash on closing day alongside everything else.
Closing costs come out of the same savings
A down payment is not the only cash you need. Land transfer tax, legal fees, title insurance and an inspection all land on the same day, and in Ontario or British Columbia the transfer tax alone can run to five figures. This calculator takes them off your savings so the figure you are left with is the one that is really left. The closing costs calculator breaks them down.
What this assumes
- A twenty-five year amortization
- Used only to work out what the premium costs in interest. It does not change the minimum down payment.
- The down payment is saved or gifted, not borrowed
- A borrowed down payment is priced higher, at 4.50% rather than 4.00%, and is only available on one or two unit properties.
- No first-time buyer relief is applied
- The closing costs figure here is before any rebate. Set first-time buyer status on the closing costs calculator to see what you could claim back.
Sources
- How much you need for a down payment · Financial Consumer Agency of Canada · checked
- Mortgage loan insurance premiums · Canada Mortgage and Housing Corporation · checked
- CMHC Purchase: mortgage loan insurance for homeownership · Canada Mortgage and Housing Corporation · checked
- CMHC Home Start · Canada Mortgage and Housing Corporation · checked
- CMHC Revises Homeowner Mortgage Loan Insurance Premiums · Canada Mortgage and Housing Corporation · checked
- Minimum qualifying rate for uninsured mortgages · Office of the Superintendent of Financial Institutions · checked
- Boldest mortgage reforms in decades come into force today · Department of Finance Canada · checked
The rules behind this calculator were last checked on .