Minimum Down Payment Requirements in Canada
The minimum down payment in Canada is set by the federal government and depends on the purchase price of the home. Here are the current requirements:
| Purchase Price | Minimum Down Payment |
|---|---|
| $500,000 or less | 5% of purchase price |
| $500,001 – $1,499,999 | 5% on first $500K + 10% on portion above $500K |
| $1,500,000 or more | 20% of purchase price |
Let me show you what this looks like at common price points in Surrey and the Fraser Valley:
| Home Price | Minimum Down Payment | % of Price |
|---|---|---|
| $500,000 | $25,000 | 5% |
| $700,000 | $45,000 | 6.4% |
| $900,000 | $65,000 | 7.2% |
| $1,000,000 | $75,000 | 7.5% |
| $1,200,000 | $95,000 | 7.9% |
| $1,500,000 | $300,000 | 20% |
Key Takeaway
CMHC Mortgage Insurance Explained
If your down payment is less than 20%, you're required to purchase mortgage default insurance through CMHC, Sagen, or Canada Guaranty. This insurance protects the lender (not you) and its premium is added to your mortgage.
| Down Payment % | Insurance Premium | Example on $800K Mortgage |
|---|---|---|
| 5% – 9.99% | 4.00% | $32,000 added to mortgage |
| 10% – 14.99% | 3.10% | $24,800 added to mortgage |
| 15% – 19.99% | 2.80% | $22,400 added to mortgage |
| 20% or more | No insurance | $0 |
💡 It's Added to Your Mortgage
While mortgage insurance adds cost, it allows you to buy a home with as little as 5% down. For many buyers in Surrey and the Fraser Valley, this is the path to homeownership — especially when saving 20% on a $900,000 home means $180,000 in cash.
5% Down vs. 20% Down — Which Is Better?
This is one of the most common questions I get as a mortgage broker. Let me break down the trade-offs:
| Factor | 5% Down ($45,000) | 20% Down ($180,000) |
|---|---|---|
| Down payment | $45,000 | $180,000 |
| Mortgage amount | $855,000 | $720,000 |
| CMHC premium (4%) | $34,200 | $0 |
| Total mortgage | $889,200 | $720,000 |
| Monthly payment (5%, 25yr) | ~$5,188 | ~$4,200 |
| Mortgage insurance? | Yes | No |
- Put 5% down if: You want to get into the market sooner, you're confident in home value appreciation, and you want to keep more cash for closing costs and emergencies
- Put 20% down if: You have the savings available, you want to avoid mortgage insurance ($30K+), you want lower monthly payments, and you're buying above $1,500,000
✅ The Middle Ground
Where Can Your Down Payment Come From?
Lenders in Canada accept down payment funds from several sources. Here are the most common:
- Personal savings — Funds in your bank account (lenders want to see a 90-day history)
- RRSP Home Buyers' Plan — Withdraw up to $60,000 tax-free from your RRSP
- First Home Savings Account (FHSA) — Withdraw up to $40,000 tax-free
- Gifted funds from immediate family — Parents, grandparents, or siblings can gift you money. You'll need a signed gift letter confirming it's not a loan
- Sale of existing property — Equity from selling your current home
- Investments — TFSA, non-registered investment accounts (may trigger capital gains)
⚠️ What's NOT Allowed
First-time buyers should check out all the incentives available in BC — you may be able to access up to $100,000 from RRSP + FHSA alone.
Strategies to Save Your Down Payment Faster
Saving for a down payment in BC's expensive housing market takes discipline and strategy. Here are approaches that work for my clients:
- Open an FHSA immediately — Start contributing $8,000/year and invest it for growth. Even 2–3 years of contributions gives you $16,000–$24,000 in tax-advantaged savings.
- Maximize RRSP contributions — Contribute to your RRSP for the tax deduction and use the refund to boost your savings. Then withdraw under the HBP when you're ready to buy.
- Automate your savings — Set up automatic transfers to a dedicated savings account on every payday. Treat it like a bill.
- Consider a high-interest savings account or GIC — For short-term savings (1–3 years), a HISA or GIC ladder keeps your money safe while earning better interest than a regular account.
- Family gifts — If family members can help, gifted funds are an accepted and common down payment source in BC.
See How Much Home You Can Afford
Estimate your buying power based on your income, down payment, and current rates.
Don't Forget Closing Costs
Your down payment isn't the only cash you'll need at closing. Budget an additional 1.5%–4% of the purchase price for closing costs including property transfer tax, legal fees, home inspection, title insurance, and property tax adjustments.
💡 Total Cash Needed