How Much is a Down Payment on a House?

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What is a Down Payment?
A down payment is the amount of money that you put towards the purchase of a home. The down payment is deducted from the purchase price of your home. Your mortgage loan will cover the rest of the price of the home.

How is a Down Payment Calculated?
The minimum amount you’ll need for your down payment depends on the purchase price of the home you’d like to buy and is calculated as a percentage of the total purchase price.  The higher the price, the large the down payment.  You can check out our handy mortgage calculator HERE.

What is the Minimum Down Payment Required in Canada?
This is incremental and based on the purchase price of the home:
  • If the purchase price is less than $500,000, the minimum down payment is 5%
  • If the purchase price is between $500,000 and $999,999, the minimum down payment is 5% of the first $500,000, and 10% on any amount above $500,000. Suppose the purchase price of your home is $800,000. Your minimum down payment will be 5% on the first $500,000, for a total of $25,000. On the remaining $800,000, your minimum down payment will be 10%, for a total of $30,000. Add both sums together and you combined down payment totals $55,000.
  • If the purchase price is $1m or more, the minimum down payment is 20%
On all mortgages less than 20%, mortgage default insurance, commonly referred to as CMHC, is required.  This protects the lender in the event the buyer defaults on their mortgage, your down payment determines the amount of CMHC insurance you pay:

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Is a Down Payment the Same as a Deposit?
These items are often mixed up by first time home buyers. The deposit is a token of intent that will be provided to the seller's brokerage when an offer is accepted, you can think of it of a down payment on the down payment. The funds will be held in trust by the seller's brokerage until closing. This is a gesture of confidence the buyer provides the seller that they intend to close on the property. Once any conditions are met and the offer is firm, the buyer would forfeit their deposit if they are unable to close. Upon closing, this deposit will be applied the rest of your down payment with your mortgage making up the remainder of the purchase price. Congratulations you just bought a home!

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