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Saving for Down Payment

Down Payments

When purchasing your first home, a new home, or an investment property like a vacation or rental home, lenders require you to contribute some of your own money toward the purchase, are known as a down payments.

A down payment provides you with initial equity in the property and demonstrates to the lender your financial commitment to the purchase and the accompanying mortgage loan.

Sources For Down Payments

Where Can Your Down Payment Come From?

Saving for a down payment is one of the biggest challenges for prospective homebuyers, but it can come from multiple sources.

Lenders will verify the origin of your down payment and how long the funds have been accessible, often requiring a 90-day transaction history. To streamline the process, keep your funds in one savings account and limit transfers during this period.

Accepted Sources
  • Savings/Chequing Accounts
    (ex. Accumulation of income/payroll)
  • Investment Accounts
    (ex. RRSP, TFSA, Mutual Funds)
  • Gifts from immediate Family Members
    (ex. e-transfer from a parent)
  • Sale of a Home
    (ex. Proceeds from the sale)
  • Sale of an Asset
    (ex. Sale of an RV)
  • Equity borrowed from another Property
  • Cash Advance borrowed from a Line of Credit*
    (*Not accepted by all insurers/lenders)
Unaccepted Sources
  • Cash
    (ex. "Under the mattress money")
  • Any funds that cannot be traced
    (ex. No history/source of origin)
  • Gifts from non-relatives
    (ex. e-transfer from a friend)
  • Undocumented Sale of an Asset
    (ex. Sale with unverifiable documents or receipt)
  • Funds from a sanctioned country/state
  • Cryptocurrencies
    (ex. Bitcoin)
  • Illegal Income
    (ex. Income derived from illegal activities)

Minimum Down Payment

How Much Of A Down Payment Do I Need?

The minimum down payment needed to purchase property in Canada is determined by several key factors:

Down Payment Calculator
Minimum Down Payment
01

Purchase Price

  • $500,000 or less: Min 5% down payment.
  • $500,001 to $1,000,000: 5% on the first $500,000 and 10% on the portion above $500,000.
  • $500,001 to $1,500,000: 5% on the first $500,000 and 10% on the portion above $500,000.
  • Over $1 million: Min 20% down payment.
  • Over $1.5 million: Min 20% down payment.
  • First-Time Homebuyers & New Construction
02

Type of Mortgage

  • High-Ratio Mortgage: Less than 20% down, requires mortgage insurance.
  • Conventional Mortgage: 20% or more down, no mortgage insurance needed.
03

Type of Property

  • Owner-Occupied Homes: Standard min down payment rules apply.
  • Rental or Investment Properties: Require a min of 20% down payment.
  • Multi-Unit Properties (5+ units): Require higher down payments, depending on the lender.
04

Financial Profile

  • Lenders may require a larger down payment if you have a poor credit history or unstable income.
05

Residency Status

  • Non-Residents: Required to make higher down payments depending on the lender’s policy.

Programs & Rebates

For Your First Home

According to the 2021 First-Time Homebuyer Survey & Financial Fitness Study conducted by Sagen, the most common source of down payments for homebuyers was personal savings, followed by funds from their RRSP using the Home Buyers Plan.

Home Buyers Plan (HBP)

The RRSP Home Buyers' Plan (HBP) is designed to help first-time homebuyers purchase a home by allowing them to withdraw money from their RRSP, without having to pay tax on the withdrawal—at least not immediately.

Learn More at HBP

Home Buyers Tax Credit​

The Home Buyers' Tax Credit (HBTC) is a non-refundable tax credit available to first-time homebuyers. It's designed to help ease the costs associated with purchasing a home by offering a financial break at tax time.

Learn More at HBTC

First Home Savings Account (FHSA)

A First Home Savings Account (FHSA) is a type of registered savings account designed to help first-time homebuyers save for their first home in a tax-advantaged way.

Learn More at FHSA

Other Federal & Provincial Programs/Rebates

Programs and rebates that are area-specific, these may provide extra funds towards closing costs and GST/HST relief. These are subject to change, ask your broker for details.

Down Payment Calculator

Calculate the amount required for your purchase

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