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Down Payment Rules for Canadian Home Buyers

Canada’s minimum down payment rules are set by the federal government and enforced through CMHC mortgage insurance requirements. For homes priced at $500,000 or less, the minimum down payment is 5%. For homes between $500,000 and $1,499,999, you need 5% on the first $500,000 and 10% on the portion above $500,000. Homes priced at $1,500,000 or more require a minimum 20% down payment and cannot be insured through CMHC, Sagen, or Canada Guaranty. As of December 2024, the insured mortgage cap was raised from $1 million to $1.5 million, and amortizations of up to 30 years are permitted for first-time buyers purchasing new builds.

If your down payment is less than 20%, you must purchase mortgage default insurance (commonly called CMHC insurance). The insurance premium ranges from 2.80% to 4.00% of the mortgage amount and is typically added to your mortgage balance. A larger down payment reduces both the insurance premium percentage and the total mortgage amount, saving you significantly over the life of the loan. Putting 20% down eliminates the insurance requirement entirely and may qualify you for better interest rates.

CMHC Insurance Premiums (2026)

Several government programs help first-time buyers save for a down payment. The First Home Savings Account (FHSA) allows annual contributions of up to $8,000 (lifetime limit $40,000) with tax-deductible contributions and tax-free withdrawals for a home purchase. The Home Buyers’ Plan (HBP) lets you withdraw up to $60,000 from your RRSP tax-free for a down payment, repayable over 15 years. You can use the FHSA and HBP together. Additionally, the First-Time Home Buyers’ Tax Credit provides up to $1,500 in federal tax relief. Down payment funds must come from your own resources — gifted down payments from family are permitted, but borrowed down payments are generally not allowed for insured mortgages.