How much deposit do you need to buy a home in Canada?

The deposit you need to buy a home in Canada depends on the purchase price and whether you qualify for mortgage default insurance. Here's how it breaks down.

Minimum Down Payment Requirements

Canada sets minimum down payment thresholds based on the purchase price of the home:

• Homes priced under $500,000: Minimum down payment is 5% of the purchase price
• Homes priced between $500,000 and $999,999: 5% on the first $500,000 and 10% on the portion above $500,000
• Homes priced at $1 million or more: Minimum down payment is 20%

The 20% Threshold

If your down payment is less than 20% of the purchase price, your mortgage is classified as high-ratio and you are required to purchase mortgage default insurance through CMHC, Sagen, or Canada Guaranty. This insurance protects the lender, not you, but it does allow you to purchase a home with a smaller down payment.

Mortgage default insurance premiums range from 2.8% to 4% of the mortgage amount depending on your down payment size, and are typically added to your mortgage balance.

If your down payment is 20% or more, your mortgage is classified as conventional and mortgage default insurance is not required.

Where Your Down Payment Can Come From

Lenders have rules about acceptable down payment sources:

• Personal savings held in a Canadian bank account for at least 90 days
• A gift from an immediate family member, accompanied by a signed gift letter confirming it does not need to be repaid
• Proceeds from the sale of another property
• Funds from a Registered Retirement Savings Plan (RRSP) under the First Home Buyer's Plan, which allows first-time buyers to withdraw up to $35,000 tax-free for a home purchase
• Proceeds from a First Home Savings Account (FHSA), introduced in 2023

Beyond the Down Payment

Your deposit is not the only upfront cost. Budget for closing costs including legal fees, land transfer tax (which varies by province and municipality), home inspection fees, title insurance, and moving costs. These typically add two to four percent of the purchase price on top of your down payment.