Buying a home in Canada is a tremendous milestone—but it starts with one grand question: How much down payment do I need?
In 2025, your answer will rely on your finances, the type of home you’re buying, and where you’re going to stay. With recent changes in mortgage rules and new government incentives, being aware of your down payment options is more important than ever.
This guide will lead you through today’s rules, real-life examples, and smart strategies to save and buy with confidence.
What Is a Down Payment?
A down payment is what you contribute when you purchase a home. The rest is financed via your mortgage. The size of your down payment will determine your mortgage size, monthly premium, and if you’ll need mortgage loan insurance.
Canadian Minimum Down Payment Regulations (2025)
Effective 2025, the Canadian minimum down payment regulations are:
- Homes priced at $500,000 or less: Minimum 5% of purchase price
- Homes priced between $500,000 and $1.5 million: 5% of the portion up to $500,000 + 10% of the portion above $500,000
- Homes priced over $1.5 million: Minimum 20% of purchase price
Example: For a home valued at $600,000:
- 5% of $500,000 = $25,000
- 10% of $100,000 = $10,000
- Total minimum down payment: $35,000
Note: If your down payment is less than 20%, you’ll generally have to purchase mortgage loan insurance.
Source – Canada.ca
What’s New in 2025?
Homeownership is now more attainable due to recent updates:
- Raised Insured Mortgage Cap: The insured mortgage cap has been raised to $1.5 million, allowing more buyers to put a down payment of less than 20% on higher-priced houses.
Source – iMortgage Capital - Extended Amortization: New-home buyers and first-time homebuyers are now eligible to receive 30-year amortizations.
Source – Canada Department of Finance
Why a Bigger Down Payment Will Save You Money
While the minimum down payment gets you into the house, a larger down payment offers a number of benefits:
- Lower Mortgage Insurance Premiums
- Smaller Monthly Payments
- Better Mortgage Rates
- More Equity
Learn more about these benefits
Where Can You Get Your Down Payment?
- Personal Savings
- RRSP Home Buyers’ Plan (HBP) – withdraw up to $35,000 tax-free
- First Home Savings Account (FHSA) – contribute up to $8,000/year (up to $40,000 lifetime)
FHSA Details - Gifts from Family
- Sale of Existing Property
- Government Incentives like the First-Time Home Buyer Incentive
About CMHC & FTHBI
Examples in the Real World
Example 1: $400,000 house with 5% down payment ($20,000)
- Mortgage: $380,000
- Insurance: ~$15,200
- Monthly Payment: ~$2,080
Example 2: $600,000 house with 10% down payment ($60,000)
- Mortgage: $540,000
- Insurance: ~$16,740
- Monthly Payment: ~$2,940
These are sample. Rates will vary.
Strategies to Reach Your Down Payment Target
- Establish a savings goal
- Automate your savings
- Reduce discretionary spending
- Increase income (side jobs, freelance)
- Utilize tax refunds and bonuses wisely
Conclusion
Learn how much down payment you need is the secret to your home-buying process. With the updates on the 2025 mortgage regulation and the new savings plans, home ownership in Canada has never been more within reach. Start planning today, discover what is at your disposal, and take the first step towards your dream home.
For a visual explanation of the new mortgage rules in Canada for 2025, check out the following video:
