Minimum Down Payment and Mortgage Insurance in Canada

The standard purchase-price tiers

For a $400,000 home, 5% is $20,000. For a $600,000 home, the calculation is $25,000 on the first $500,000 plus $10,000 on the remaining $100,000, for a $35,000 minimum.

• 1Below $500,000: 5% of the purchase price
• 1$500,000 to below $1.5 million: 5% of the first $500,000 plus 10% of the remainder
• 1$1.5 million or more: generally 20%

What mortgage loan insurance does

A down payment below 20% usually creates a high-ratio mortgage that requires mortgage loan insurance. The insurance protects the lender if the borrower defaults; it is not home insurance and does not replace disability or life insurance. The premium can increase the mortgage balance.

• 2It protects the lender, not the buyer
• 2The premium depends partly on loan-to-value
• 2Provincial sales tax treatment can vary

Do not spend every saved dollar on the down payment

Keep a separate allowance for closing costs and an emergency buffer. A larger down payment can reduce the mortgage, but using all available cash can leave a buyer unable to cover legal fees, adjustments, moving costs or immediate repairs.

Worked examples at $800,000 and $1.5 million

For an $800,000 home, the standard minimum is 5% of the first $500,000 ($25,000) plus 10% of the remaining $300,000 ($30,000), for $55,000 in total. Because that is below 20% of the purchase price, mortgage loan insurance would typically be required if the mortgage otherwise qualifies.

For a $1.5 million home, the standard minimum is 20%, or $300,000. Keep legal fees, land transfer tax, inspection and other closing costs separate from both examples.

Insurance premium versus cash required at closing

A lender may add the mortgage-insurance premium to the mortgage, which increases the amount on which interest is paid. Provincial sales tax on the premium may have to be paid in cash and cannot necessarily be added to the mortgage. The ToolsFA affordability result does not calculate either amount.

Worked premium estimate: $800,000 purchase

Assume an $800,000 owner-occupied home, the $55,000 standard minimum down payment and a 25-year amortization. The base mortgage before insurance is $745,000, so the loan-to-value ratio is 93.125%. In CMHC's standard table, the premium for more than 90% and up to 95% loan-to-value is 4.00% of the base mortgage.

Four percent of $745,000 is $29,800. If the lender adds that premium to the loan, the financed balance becomes $774,800 before any other permitted adjustment. This is a transparent example, not a quote: insurer eligibility, premium surcharges, provincial tax and lender treatment still need confirmation, and ToolsFA does not add this amount to its affordability result.

Frequently asked questions