After 20 years in the mortgage industry, I can confidently say this: there’s a lot of confusion around how much you actually need for a down payment. Let’s break it down clearly and simply.
1. Minimum Down Payment – 5% Rule
- The minimum down payment in Canada is 5% of the purchase price.
- This applies to any owner-occupied property, whether it’s your first home or your fifth.
- Example:
- Purchase price $400,000 → Minimum down payment = $20,000 (5%).
2. When You Need 20% Down
There are two main scenarios where a 20% down payment is required:
- To avoid mortgage default insurance (commonly known as CMHC, Sagen, or Canada Guaranty insurance).
- When purchasing a rental property (not owner-occupied).
👉 Even if you already own a home, you can still purchase another property to live in with as little as 5% down — as long as it’s your primary residence.
3. Buying a Home for a Family Member
You can also purchase a property for an immediate family member—like a parent or child—with as little as 5% down.
- The key condition: it must be owner-occupied by the family member, not rented out.
- This is an excellent way to help aging parents or young adult children get into the market.
4. Post-Separation or Divorce
After a marriage or common-law separation, you’re considered a first-time homebuyer again—even if you’ve owned a home before.
That means:
- You can buy a new home with as little as 5% down.
- You can re-access the First-Time Home Buyer RRSP withdrawal program (Home Buyers’ Plan) or use the FHSA (First Home Savings Account)
Quick Recap
| Scenario | Minimum Down Payment | CMHC/Insurance Required? |
| Owner-occupied home | 5% | Yes, if under 20% |
| Second home (you’ll live in it) | 5% | Yes, if under 20% |
| Rental property | 20% | No |
| Buying for a family member | 5% | Yes, if under 20% |
| Post-separation/divorce | 5% | Yes, if under 20% |
Final Thoughts
The minimum down payment isn’t one-size-fits-all — it depends on how the property will be used. The best way to know what you qualify for is to have a quick review of your full financial picture and goals.
If you’re planning a move, supporting family, or starting fresh after separation, I can help you map out your best options — clearly and confidently.
The first step is a pre-approval, allowing us to assist in providing you the information you need to make informed decisions.
