Down Payment Guide: How Much Do You Really Need?

The down payment is the part of the purchase price you pay from your own resources. It sets your mortgage size, decides whether you need default insurance, and affects your rate. Here is how much you actually need and where it can come from.

The minimums

| Purchase price | Minimum down payment | | --- | --- | | Up to $500,000 | 5% | | $500,000 to $1,500,000 | 5% on the first $500,000, then 10% | | Over $1,500,000 | 20% (no default insurance available) | | Rental / non-owner-occupied | 20% |

At 20% or more, you have a conventional mortgage with no insurance premium. Below 20%, the premium (2.80%–4.00% of the mortgage) is added to your balance, and the provincial sales tax on it is due in cash at closing.

Where the money can come from

Your own savings. The cleanest source. Lenders want 90 days of account history and an explanation for any large deposit.

RRSP — the Home Buyers' Plan. Each first-time buyer can withdraw up to $60,000 tax-free from an RRSP toward a purchase, repaid to the RRSP over 15 years. The funds must have been in the account at least 90 days.

FHSA — First Home Savings Account. Contributions are tax-deductible (like an RRSP) and withdrawals for a first home are tax-free (like a TFSA). Up to $8,000 per year, $40,000 lifetime.

A gift from immediate family. Parents, grandparents, and siblings can gift the down payment. You need a signed gift letter stating the money is a genuine gift with no repayment expected, and some lenders want proof the giftor had the funds and that they landed in your account.

Proceeds from selling another property. Documented with the sale agreement and, if it has not closed yet, a lawyer's confirmation.

Borrowed funds. Some lenders allow a portion of the down payment to be borrowed (a "flex down" product), but the payment on that loan counts against your debt-service ratios and the mortgage insurance premium is higher.

How much down is right

More down means a smaller mortgage, no premium past 20%, and lower payments — but it also means less cash in reserve and, often, buying later. In a market where prices and rents are rising, buying sooner with 5–10% down frequently beats waiting years to reach 20%. Run both scenarios with real numbers before deciding.

Bring me the sources you are planning to use and I will tell you which ones each lender accepts, what documentation they will want, and whether the closing-cost cash still works once the premium tax is added.