Do You Need 20% Downpayment for a House in Canada?
Do You Really Need 20% for a Down Payment in Canada?
One of the most common questions buyers ask is: “Do I really need 20% for a down payment to buy a home?”
The short answer is no—but the long answer is important, especially if you’re buying in Ontario or planning to purchase a home in Cambridge, Ontario.
There’s a lot of misinformation online about down payments, and believing the wrong advice can delay your homeownership plans for years. Let’s break down how much down payment you actually need in Canada, when 20% is required, and how first-time buyers can get into the market sooner than they think.
The Minimum Down Payment in Canada (Not 20%)
In Canada, the minimum down payment depends on the purchase price of the home—not a flat 20%.
Here’s how it works:
5% on the first $500,000
10% on the portion between $500,000 and $999,999
20% if the purchase price is $1,000,000 or more
For example, if you’re buying a $650,000 home in Cambridge, Ontario:
5% on the first $500,000 = $25,000
10% on the remaining $150,000 = $15,000
Total minimum down payment: $40,000
That’s far less than the $130,000 you’d need if 20% were mandatory.
Why People Think You Need 20% Down
The myth that you must have a 20% down payment usually comes from one thing: mortgage default insurance.
If you put less than 20% down, you are required to purchase CMHC mortgage insurance (or through Sagen or Canada Guaranty). This protects the lender—not you—if you default on the loan.
Because of this, many people incorrectly assume 20% is required to buy a home. In reality, 20% simply allows you to avoid mortgage insurance, not avoid homeownership.
What Is CMHC Mortgage Insurance?
CMHC mortgage insurance allows buyers to purchase a home with a smaller down payment. The insurance premium is added to your mortgage and paid over time.
Premiums are based on your down payment:
5% down → higher premium
10–15% down → lower premium
While this increases your mortgage slightly, it also allows many buyers—especially first-time home buyers in Ontario—to enter the market sooner.
For many buyers, paying mortgage insurance is worth it if it means buying now instead of waiting years to save 20%.
When You Actually DO Need 20% Down
There are situations where 20% down is required:
Homes priced $1,000,000 or more
Some investment properties
Certain self-employed or alternative lending scenarios
Buyers who want to avoid mortgage insurance entirely
If you’re purchasing a luxury home, a commercial property, or a non-owner-occupied property, higher down payment requirements often apply.
First-Time Home Buyer Programs in Ontario
If you’re a first-time home buyer, there are programs designed to help with affordability:
First-Time Home Buyer Incentive (FTHBI)
RRSP Home Buyers’ Plan (HBP) – withdraw up to $35,000 tax-free
Land Transfer Tax rebates (provincial and municipal where applicable)
These programs can significantly reduce the upfront cash needed to buy a home in Cambridge or across Ontario.
Is It Better to Put 20% Down?
Putting 20% down can be beneficial, but it’s not always the best financial move.
Pros of 20% down:
No mortgage insurance
Lower monthly payments
More equity from day one
Cons:
Ties up large amounts of cash
Delays homeownership
Missed market appreciation
In fast-moving markets, waiting to save 20% can sometimes cost more than mortgage insurance due to rising home prices.
How Much Down Payment Do YOU Really Need?
The right down payment depends on:
Your income and debt
Your long-term plans
Your comfort with monthly payments
Market conditions in your area
A trusted Ontario real estate professional can help you understand your options and connect you with a mortgage expert who can run real numbers—not estimates.
Final Thoughts: Don’t Let the 20% Myth Stop You
You do not need 20% down to buy a home in Canada. Many buyers successfully purchase with 5–10% down, especially first-time buyers.
If you’re thinking about buying a home in Cambridge, Ontario, understanding your real down payment options could mean buying years sooner than you expected.
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