Down payments.
Buying a home is a big step, and understanding your down payment is an important part of planning. A down payment is the amount of money you pay upfront toward the purchase price of your home, with the remaining amount typically financed through a mortgage.
Minimum payment.
The minimum down payment you need depends on the purchase price of your home and other factors.
- For homes up to $500,000: You must put down at least 5% of the home’s price
- For homes between $500,000 and $999,999: You need to put down 5% for the first $500,000, and then 10% for the part of the price over $500,00
- For homes $1 million or more: You need to put down at least 20%
If your down payment is less than 20%, you’ll have to get mortgage loan insurance, which protects your financial institution in case of default. Down payments can come from savings, borrowed or as a gift from a family member.
Saving for a down payment.
There are many ways you can save for your down payment including a savings account, Tax-Free Savings Account or a First Home Savings Account (for first time homebuyers only). If you have a Registered Retirement Savings Plan (RRSP), you can use some of the money as a down payment.
Tax-Free Savings Account (TFSA)
A flexible savings tool where you can save money and any earnings grow tax free.
First Home Savings Account (FHSA)
A registered savings account designed to help first-time homebuyers save up to $40,000 tax-free.
Registered Retirement Savings Plan (RRSP)
Withdraw up to $35,000 tax free from your RRSP and repay within 15 years from withdrawal.
Receiving a down payment gift.
You might be able to receive a gift from someone to help you with your down payment. However, there are some rules by the government regarding who can give you this gift.
- Family members: You can receive a down payment gift from certain family members, including parents, grandparents, siblings, aunts and uncles. The gift must be a genuine gift and not a loan that you're expected to pay back.
- Fiancé or spouse: If you’re engaged to be married or already married, your fiancé or spouse can provide you with a down payment gift.
- Common-law partner: In some cases, if you’re in a common-law relationship, your partner may be allowed to gift you money for the down payment. There are rules regarding common-law relationships that vary by province, so it’s important to check specific regulations related to your location.
It’s important to be aware that not everyone can provide a down payment gift, including friends, business partners and other non-family members.
When receiving a down payment gift, it’s important to document the transaction to be able to provide it to your financial institution and any other government regulators. Documentation should include a gift letter signed by both the donor (the person providing the gift) and the recipient (homebuyer), stating that the money is a gift and not a loan, names of individuals and their relationship to each other. Additionally, you may need to provide proof of the transfer of funds, such as bank statements.
Before you accept a down payment gift, consult with a Mobile Mortgage Specialist or Financial Advisor to ensure you understand all requirements and implications involved.
Getting a loan for a down payment.
If you’re looking to enhance your down payment, you can explore different loan options. However, it’s important to approach this with caution as loans come with the responsibility of repayment and accrued interest. If you get a loan for your down payment, this could affect how much you qualify to borrow for a mortgage.
More support is available.
From tax credits to savings programs, there are a variety of government supports available to make homeownership more affordable.
Tools to help you plan your mortgage.
Common questions.
Here's what people ask us the most.
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The minimum down payment you need depends on the purchase price of your home. In Canada, the minimum can start at 5% for eligible homes, while a larger down payment may help reduce your mortgage amount and avoid mortgage loan insurance. A Mobile Mortgage Specialist or Financial Advisor can help you understand what may apply to your situation.
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CMHC mortgage loan insurance protects the lender if you’re unable to make your mortgage payments. If your down payment is less than 20% of the purchase price, mortgage loan insurance is typically required. The cost of this insurance is usually added to your mortgage amount.
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Your down payment may come from sources such as personal savings, the sale of another property, eligible gifts from family members or other approved sources. Your advisor can help you understand what documentation may be required.
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A larger down payment can reduce the amount you need to borrow, which may lower your mortgage payments and overall interest costs. However, it’s also important to keep funds available for closing costs, moving expenses and other homeownership costs. A Mobile Mortgage Specialist or Financial Advisor can help you find the right balance.
Let’s build your down payment plan.
Whether you’re saving from scratch, receiving a family gift, or tapping into government programs, the right strategy makes all the difference. Our Mobile Mortgage Specialists and Financial Advisors will help you map out a plan that gets you to your down payment goal — and into your home — sooner.
