What 20 per cent down decides

Posted by Ricky Jin on Tuesday, September 29, 2026 at 9:00 AM By Ricky Jin / September 29, 2026 Comment

Wisdom from The Desk

True or false · You need 20 per cent down to buy a home. False. The federal minimum starts at 5 per cent, and 20 per cent is the point below which a mortgage typically has to carry mortgage loan insurance.

The minimum runs on a federal scale

The Financial Consumer Agency of Canada publishes the minimum down payment by purchase price.

$500,000 or less · 5 per cent of the purchase price
$500,000 to $1.5 million · 5 per cent of the first $500,000, and 10 per cent of the portion above $500,000
$1.5 million or more · 20 per cent of the purchase price

Source · Financial Consumer Agency of Canada, how much you need for a down payment

Normally the minimum has to come from your own funds, and the same page notes that a lender may ask a self-employed buyer, or one with a poor credit history, for a larger down payment. The deposit on an offer is a separate number from the down payment, which we set out in four questions about the paperwork.

Below 20 per cent, a mortgage typically carries insurance

Mortgage loan insurance protects the lender in case the payments stop. The lender pays the premium and usually passes it on to the borrower, either as a lump sum up front or added to the mortgage, where interest runs on it at the mortgage's own rate.

The premium is a percentage of the loan, and it rises as the down payment falls. CMHC's published premiums run from 2.80 per cent of the loan, where just over 80 per cent of the price is borrowed, to 4.00 per cent where 95 per cent is, and higher where the down payment itself is borrowed.

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Twenty per cent also moves the amortization limit

With less than 20 per cent down, the longest amortization allowed is 30 years for a first-time buyer or a new build, and 25 years in every other case, under rules in force since December 15, 2024. With more than 20 per cent down, the lender sets the limit.

At $1.5 million, 20 per cent becomes the floor

At $1.5 million or more the minimum down payment is 20 per cent, and mortgage loan insurance is not available at that price. The federal government raised that ceiling from $1 million to $1.5 million on December 15, 2024.

Twenty per cent is a line in a rule, and the rule is published.

For your numbers, talk to a mortgage professional.