minimum down payment rules set by Canada’s regulatory bodies. Here’s what you need to know:

• If a property’s purchase price is $500,000 or less, the minimum down payment is 5%. Canada

• If the purchase price is between $500,000 and $1.5 million, the rule changes: you need 5% on the first $500,000 plus 10% on the portion above that. 

• For homes priced above $1.5 million, a 20% down payment is generally required for mortgage default insurance eligibility. 

When you put down less than 20%, most lenders require mortgage default insurance, commonly known as CMHC insurance (or similar private insurer coverage). Here's how it works:

• CMHC insurance protects the lender, not you.

• Insurance premiums depend on the loan-to-value (LTV) ratio, which is directly related to your down payment size. For example:

• 5%–9.99% down → Premium ~ 4.00% of the mortgage.

• 10%–14.99% down → ~ 3.10%.

• 15%–19.99% down → ~ 2.80%.

• In Ontario, provincial sales tax (PST) applies on the CMHC premium (8% as of current rules), and this tax cannot be added into your mortgage — you pay it at closing.

• The insurance premium is often added to your mortgage principal, meaning you pay interest on it over time unless you pay it upfront. 

• Lower upfront cash needed: This is a big win, especially for first-time buyers.

• Access to homeownership sooner: If saving for 20% takes years, 5% can get you in now.

• Mortgage rates: Insured mortgages (with CMHC) often have competitive rates; sometimes lenders price those loans attractively. (Though depends on broker/lender.)

• CMHC premium cost: This can add up and be financed into your mortgage — increasing your long-term cost.

• Higher monthly payments: Because your mortgage principal is larger (after adding insurance), your payments may be higher.

• Amortization limits: For insured mortgages, maximum amortization is often 25 years (though first-time buyers or new builds may go to 30).

• More interest paid over time: Because you're borrowing more, over the life of your mortgage you'll likely pay more interest.

• Big upfront cash requirement: Saving for 20% is often the hardest part.

• Opportunity cost: That money could be invested or used elsewhere.

• Delay in buying: If you're waiting to save, rising real estate prices could outpace your savings.

• Credit Score Requirements: For CMHC-insured mortgages, at least one borrower typically needs a credit score of 600+.

• Debt Service Ratios (GDS/TDS): Insured mortgages often have maximum Gross Debt Service (GDS) of 39% and Total Debt Service (TDS) of 44%.

• Insurable Amount Cap: As of recent updates, CMHC-insurable mortgages are capped for properties under $1.5 million.

• Amortization:

• Standard insured: max 25 years. eppdscrmssa01.blob.core.windows. CMHC Quick Reference

• First-time buyers / newly constructed homes: can go up to 30 years under certain conditions.

• Source of Down Payment: The down payment must come from acceptable sources (savings, non-repayable gift). CMHC generally disallows non-traditional sources (like a loan) for some bands. Learn more about mortgage pre-approval

Here are a few examples to help put things in perspective:

• Example 1: Buying a $450,000 home in Ontario

• Minimum down payment = 5% → $22,500. Canada

• Because it’s under 20%, CMHC insurance is required → premium ~4% of the mortgage amount (if 5% down).

• That insurance premium could be added to the mortgage, and PST (8%) on that premium is paid at closing.

• Example 2: Buying a $700,000 home

• First $500,000 → 5% = $25,000

• Remaining $200,000 → 10% = $20,000

• Total minimum down payment = $45,000.

• With this < 20% down, you’ll need CMHC or similar insurance, and pay premium accordingly.

• Example 3: Putting down 20% on that $700,000 home = $140,000

• No insurance needed → savings over time.

1. Run the numbers: Use a CMHC-insurance calculator (like on Ratehub or WOWA) to estimate how much your premium will be and how it affects your mortgage.

2. Always factor in closing costs: Remember to budget for PST on insurance (in Ontario), legal fees, land transfer taxes, and more.

3. Choose your down payment strategically: If you can afford more than the minimum, weigh whether putting in more now (i.e., 20%) saves you more in the long run.

4. Talk to a mortgage agent: A licensed mortgage agent (like me) can help you compare lenders, mortgage terms, amortization periods, and estimate total cost including insurance.

5. Save smart: If you're targeting 20% down, set up a dedicated savings plan (e.g., TFSA, high-interest savings) to accelerate your goal.

Q: Can I avoid CMHC insurance if I borrow more than 20% for down payment?
A: No — borrowing your down payment (e.g., via a loan) is often not considered acceptable “traditional” source by CMHC, and could disqualify you or raise your effective risk.

Q: Does 20% down always mean no insurance?
A: Usually yes, for conventional mortgages. But in rare cases, lenders may still require insurance if they deem risk is high or property doesn’t meet certain standards.