Down payment다운페이먼트

What is it?

The down payment is the part of the price you pay with your own money instead of borrowing it with a mortgage (a loan secured by the home). The price minus the down payment is the amount you borrow.

For example, if the price is $800,000 and your down payment is $160,000 (20%), your mortgage is $640,000. A bigger down payment means less borrowing and less interest. Below 20%, you also pay a mortgage insurance premium (explained below).

How is it different from the deposit?

The deposit is money you pay right after your offer is accepted. The down payment is all of your own money paid on closing (the day you pay the rest and the home becomes yours). The deposit counts as part of the down payment. It is not an extra payment.

Example: the price is $800,000, you planned a 20% down payment ($160,000) and paid a $40,000 deposit. On closing you send your lawyer the remaining $120,000 plus closing costs.

What is the minimum?

The minimum down payment comes from the federal mortgage insurance rules (the Eligible Mortgage Loan Regulations). If your down payment is less than 20%, the lender needs mortgage loan insurance (from CMHC or a private insurer; it protects the lender if you cannot pay). The conditions for that insurance are, in effect, the minimum down payment rules.

The price limit for insured mortgages is “less than $1,500,000” for insurance applications received on or after December 15, 2024 (it was lower before). The federal budget of November 5, 2026 announced insurance changes for 3- and 4-unit (“missing middle”) homes (in effect February 1, 2027) and proposes raising the home price limit for “optional mortgage insurance” from $1,000,000 to $1,500,000 and allowing 30-year amortizations, “provided that at least one borrower is a first-time home buyer or the home is newly built” (the budget’s words; not law yet, no date). The budget does not define “optional” insurance; reading it as insurance on loans with 20% or more down is our interpretation. This budget does not change the limit above or the minimum down payment for ordinary homes. Ask your lender or mortgage broker for the current rules.

Worked examples

Estimates for reference only. A lender can ask for a larger down payment based on your income, debts and credit score.

Below 20%, you pay a mortgage insurance premium

With less than 20% down, mortgage loan insurance is required, and the lender usually passes the premium on to you. The premium is a percentage of the loan, and it is higher when your down payment is smaller. CMHC’s rates are 4.00% of the loan at a loan-to-value (LTV) of 90.01% to 95%, 3.10% at 85.01% to 90%, and 2.80% at 80.01% to 85%.

The premium itself can be added to the mortgage and paid over time. In Ontario, however, the premium is subject to 8% provincial sales tax (RST), and that tax cannot be added to the loan, so you pay it in cash on closing.

Example: price $800,000, down payment $55,000, so the loan is $745,000 (LTV about 93%). The 4.00% premium is $29,800, added to the loan for a total mortgage of $774,800. The 8% tax on the premium, $2,384, is paid separately on closing.

Where can the money come from?

• Savings, investments or the sale of another property: the usual “traditional” sources.
• A gift from family that you do not have to repay: CMHC treats a non-repayable gift from a relative as a traditional source. Under the OSFI guideline for banks, the lender will ask for a gift letter confirming the money does not have to be paid back.
• FHSA (First Home Savings Account): tax-advantaged savings for a first home. The basic yearly limit is $8,000 (some unused room can carry forward to the next year), and the lifetime limit is $40,000.
• HBP (Home Buyers’ Plan): lets you withdraw up to $60,000 in a calendar year from your RRSP (retirement savings) for a first home and repay it later.
• Borrowed money (a personal loan or line of credit): a “non-traditional” source. CMHC allows it only if the money has no link, direct or indirect, to the sale (for example, it cannot come from the seller or builder). It is only for 1- or 2-unit homes, borrowers with a strong credit history, and an LTV of 90.01% to 95%. The premium is higher (4.50%). Non-permanent residents cannot use this option.
• Cash-back or incentive payments from a lender or builder: the OSFI guideline says these do not count as part of the down payment.

What proof will the lender ask for?

The OSFI guideline (B-20) tells banks to make rigorous efforts to confirm where the down payment comes from. Expect to show recent bank and investment statements, an explanation for any large deposit, a gift letter if the money is a gift, and the sale agreement and statement of adjustments if you sold a home. How many months of statements you need varies by lender, so ask at pre-approval.

Because of anti-money-laundering rules, unexplained cash deposits are a problem. It is best to gather the down payment in one account before you write an offer.

First-time buyers and new builds can use a 30-year amortization

An insured mortgage (less than 20% down) normally has a maximum amortization (the time to pay off the whole loan) of 25 years. But if any borrower is a first-time home buyer under the regulations, or the home is newly built, the amortization can be up to 30 years.

Under the regulations, a first-time home buyer includes someone who has never bought a home in Canada, or who has not lived in a home owned by themselves or their spouse in this year or the four previous calendar years. A 30-year amortization lowers the monthly payment but increases the total interest you pay.

Pre-construction is different

When you buy a home from a builder before it is built, you pay much of the down payment as deposits in several instalments. The share and schedule vary by project and are written in the purchase agreement. You get the mortgage years later, on final closing.

Rules and the appraised value can change in the meantime, so plan your financing with a mortgage broker or lender before you sign. See “Pre-construction deposit structure” for details.