What is the Minimum Downpayment to Buy a House in Canada?
Short Answer
5% on $500,000, 10% on the balance up to $1 million and 20% for homes that are $1 million or more. Also note that if you put 20% down, you don’t need CMHC mortgage insurance.
Long Answer
You do need to put down at least 5% of the value of a home to be get a mortgage in Canada up to $500,000. These are the rules. They’re good, actually, because it means we live in a more stable country when it comes to the real estate market. You’d think you’d want to be able to get a home with nothing down, but that would make us a lot more like the U.S. before the recession. Not a great prospect.
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It’s not hard to calculate 5% down payments, but I thought I would show you what they look like for some home values. Here you can see how much you need for a down payment for homes at $50,000 increments:
| House Cost |
|
5% Down Payment |
|
|
|
| $150,000 |
|
$7,500 |
|
|
|
| $200,000 |
|
$10,000 |
|
|
|
| $250,000 |
|
$12,500 |
|
|
|
| $300,000 |
|
$15,000 |
|
|
|
| $350,000 |
|
$17,500 |
|
|
|
| $400,000 |
|
$20,000 |
|
|
|
| $450,000 |
|
$22,500 |
|
|
|
| $500,000 |
|
$25,000 |
When it comes to homes worth more than $500,000 any additional amount on the value of the home must be purchased with a 10% down payment.
So:
| House Cost |
|
5% of 500k |
Balance Over $500,000 |
10% of Balance |
Total Down Payment (5% + 10%) |
|
|
|
|
|
|
| $550,000 |
|
$25,000 |
$50,000 |
$5,000 |
$30,000 |
|
|
|
|
|
|
| $650,000 |
|
$25,000 |
$150,000 |
$15,000 |
$40,000 |
|
|
|
|
|
|
| $750,000 |
|
$25,000 |
$250,000 |
$25,000 |
$50,000 |
|
|
|
|
|
|
| $950,000 |
|
$25,000 |
$450,000 |
$45,000 |
$70,000 |
Houses over $1 million require 2%0 down, and at that point, CMHC Insurance is not needed.
Is it a good idea to put more money down on your house? Absolutely – you can put down as much as you want or can afford. But many people just put down the minimum – especially with first time home purchases.
To learn more about how you can get your first home, read Can I Afford to Buy a Home?