In real estate, the down payment is the total cash you put toward purchasing a home. It’s the purchase price minus your mortgage amount and can come from your bank account, RRSP funds, or funds from various investments.
How much Down Payment is required?
There is no set down payment amount—it depends on the property’s purchase price. If your down payment is less than 20%, you’ll need CMHC mortgage insurance, which protects the lender in case of default. If you put 20% or more down, your mortgage is uninsured, meaning no CMHC fees, but lenders may have stricter qualification requirements.
Minimum Down Payment Requirements:
- Up to $500,000 → 5% of the purchase price
- $500,000 to $1,000,000 → 5% on the first $500,000, plus 10% on the portion between $500,000 and $1,500,000
- Over $1,500,000 → 20% on the amount above $1.5M
Are there other factors that can affect my Down Payment Requirements?
Yes, several factors can impact how much down payment you need, including:
- Appraisal value vs. purchase price – If the appraisal comes in lower than the purchase price, you may need to cover the difference.
- Property type – Rental and leasehold properties typically require a higher down payment.
- Credit score and financial history – A lower credit score or past financial issues may lead to higher down payment requirements.
- Limited credit history – If you’re a new immigrant or have little credit history, lenders may require a larger down payment.
When is a Down Payment Payable?
Your full down payment isn’t due until a few days before your completion date. The funds are provided to your lawyer or notary along with your other closing costs.
Is a Down Payment the same as a Deposit?
No, down payments and deposits are not the same. While a deposit eventually becomes part of your down payment, it is usually paid when an offer becomes firm (after subjects are removed). Whereas, the down payment is paid to your lawyer closer to the completion date.
If you would like more information on the buying process take a look at our Home Buying Guide.
