Down payment rules, mortgage insurance and the stress test
Last reviewed October 30, 2026
How much you need to put down depends on the price of the home, and how much you put down determines whether you pay mortgage default insurance. Here are the current federal rules, with examples at typical London price points.
Minimum down payment
| Purchase price | Minimum down payment |
|---|---|
| $500,000 or less | 5% of the purchase price |
| $500,000 to $1,499,999 | 5% of the first $500,000 + 10% of the portion above $500,000 |
| $1,500,000 or more | 20% of the purchase price |
Source: Financial Consumer Agency of Canada. The insured mortgage limit rose from $1 million to $1.5 million on December 15, 2024.
Examples
| Price | Calculation | Minimum down |
|---|---|---|
| $400,000 | 5% × $400,000 | $20,000 |
| $500,000 | 5% × $500,000 | $25,000 |
| $600,000 | $25,000 + 10% × $100,000 | $35,000 |
| $750,000 | $25,000 + 10% × $250,000 | $50,000 |
Mortgage default insurance
If you put down less than 20%, your mortgage must be insured against default, through CMHC, Sagen or Canada Guaranty. The insurance protects the lender, not you, but it's what allows lenders to offer mortgages with small down payments. The premium is a percentage of the mortgage amount and is usually added to the mortgage.
| Down payment | Premium (% of mortgage) |
|---|---|
| 5% to 9.99% | 4.00% |
| 10% to 14.99% | 3.10% |
| 15% to 19.99% | 2.80% |
Standard CMHC premiums for owner-occupied homes. Surcharges can apply, for example for a 30-year amortization. Confirm on cmhc-schl.gc.ca.
Don't forget the tax on the premium. In Ontario, provincial sales tax applies to mortgage default insurance premiums. It can't be added to your mortgage and is paid at closing. On a $450,000 home with 5% down, the premium is about $17,100 (4% of $427,500), and the tax on it is about $1,368, due in cash at closing.
30-year amortizations for first-time buyers
Insured mortgages have traditionally been limited to 25-year amortizations. Since December 15, 2024, first-time buyers and buyers of newly built homes can get insured mortgages with up to 30-year amortizations. A longer amortization lowers your monthly payment, but you pay more interest over the life of the mortgage, and a premium surcharge applies. It's a useful option, but worth comparing both ways with your lender.
The mortgage stress test
To qualify for a mortgage at a federally regulated lender, you must show you can afford payments at a qualifying rate: generally the higher of 5.25% or your contract rate plus 2%. That's why your maximum approval is lower than a simple payment calculation would suggest. Lenders look at:
- Gross debt service (GDS) ratio: housing costs (mortgage payment at the qualifying rate, property tax, heating, and a portion of any condo fees) as a share of your income.
- Total debt service (TDS) ratio: housing costs plus all other debt payments (car loans, credit cards, student loans, lines of credit).
Paying down a car loan or credit card balance before you apply can noticeably increase how much you qualify for.
Is 20% down worth waiting for?
Putting down 20% or more avoids mortgage insurance entirely. But waiting to save 20% can take years, and home prices and rents change in the meantime. There's no universal answer. Compare:
- The insurance premium (and the tax on it) at your current savings level.
- How long it would take to save more, and how much rent you'd pay meanwhile.
- How confident you are about where prices and rates are heading. Hint: nobody really knows.
Where your down payment can come from
- Savings, including your FHSA and TFSA
- RRSP withdrawals through the Home Buyers' Plan
- Gifts from immediate family
- Proceeds from selling another property
- In some cases, the City of London's assistance program
Borrowed down payments are restricted for insured mortgages. Talk to your lender before using any borrowed funds.