How much down payment do I actually need?

In Canada, the minimum down payment depends on the purchase price of the home.

For homes priced at $500,000 or less, the minimum down payment is generally 5%.

For homes priced above $500,000 but below $1.5 million, it's generally 5% on the first $500,000 and 10% on the portion above $500,000.

For homes priced at $1.5 million or more, the minimum down payment is generally 20%.

So if you're buying for more than $500,000, you don't necessarily need 10% of the entire purchase price — the calculation is tiered.

What happens if I put less than 20% down?

When your down payment is less than 20%, you'll generally need mortgage default insurance.

The insurance protects the lender, not the borrower, and the premium is usually added to your mortgage rather than paid entirely upfront.

It does increase the amount you're borrowing, but an insured mortgage can allow you to purchase a home without waiting until you've saved a 20% down payment.

Is 20% down always better?

Not necessarily.

Putting 20% down means you generally won't require mortgage default insurance, and you'll start with more equity in your home.

But that doesn't automatically make it the best choice.

If putting 20% down would completely drain your savings, leave you without an emergency fund or prevent you from dealing with other financial priorities, a smaller down payment might make more sense.

There can also be differences in mortgage rates depending on the amount of equity and type of mortgage.

This is why I like to look at the whole picture rather than simply saying, “Put down as much as possible.”

Where can my down payment come from?

Your down payment doesn't necessarily have to come entirely from money sitting in a savings account.

Depending on your circumstances, acceptable sources may include personal savings, investments, proceeds from selling another property or a gift from an immediate family member.

Eligible first-time buyers may also be able to use programs such as the Home Buyers' Plan or a First Home Savings Account (FHSA).

Each option has rules and documentation requirements, so it's worth talking about where your down payment is coming from before you make an offer.

Don't forget about closing costs

Your down payment isn't the only cash you'll need.

There can also be legal fees, property adjustments, home inspection costs, moving expenses and other closing costs.

Your lender may also want to see that you have additional funds available for closing rather than every dollar going toward your down payment.

Planning for these costs ahead of time means fewer unpleasant surprises when possession day gets close.

Should I get pre-approved before I start looking at homes?

Yes.

And not just because you want to know the maximum mortgage amount a lender might approve.

A good pre-approval conversation should help you understand your down payment, expected monthly payment, closing costs and what purchase price actually feels comfortable for you.

What you can qualify for and what you want to spend don't have to be the same number.

Buying your first home shouldn't start with a real-estate listing. It should start with a plan.

Before you fall in love with a house, let's figure out your numbers and make sure you know exactly what you're working with.

Thinking about buying your first home?

Let’s figure out your down payment, comfortable monthly payment and realistic price range before you start house hunting.