Minimum down payment in Canada is tiered by purchase price. Up to $500,000 the minimum is 5%. Between $500,000 and just under $1.5 million, it is 5% on the first $500,000 plus 10% on the remainder. At $1.5 million and above, the file is uninsurable and 20% is required. Worked on an $800,000 purchase: 5% of $500,000 is $25,000, plus 10% of the remaining $300,000 is $30,000, for a minimum down payment of $55,000 — about 6.9% of the purchase price, not a flat 5% or 10%.
The default, least-questioned sources of down payment are the client's own savings with a documented history, proceeds from the sale of an existing property, and gifts from immediate family. Each needs a paper trail: 90 days of statements showing savings accumulate rather than appear, a sale closing statement, or a gift letter and evidence the funds actually moved.
A gift must be genuinely non-repayable — if there is any expectation of repayment, lenders and insurers will treat it as a loan, which changes both the source-of-funds analysis and the borrower's debt picture. The gift is typically expected from an immediate family member (parent, grandparent, sibling, in some cases a spouse), documented with a signed gift letter stating the amount, the relationship, and that repayment is not expected. Lenders also want to see the funds land in the borrower's account with enough lead time before closing to confirm the source, rather than appearing the day before funds are due.
The Home Buyers' Plan (HBP) lets a qualifying first-time buyer withdraw up to $60,000 from an RRSP, tax-free, to put toward a qualifying home, provided it is repaid back into the RRSP over the following years or included in income if not repaid. First-time buyer status for the HBP generally means the borrower (and their spouse or common-law partner, if applicable) has not owned and lived in a home as a principal residence in the current year or the preceding four calendar years. The newer First Home Savings Account (FHSA) is a separate, complementary tool: contributions are tax-deductible, growth is tax-free, and a qualifying withdrawal for a first home is also tax-free, up to an $8,000 annual and $40,000 lifetime contribution limit. Used together, HBP and FHSA withdrawals can meaningfully close a down payment gap without touching non-registered savings.
For 1–2 unit properties financed between 90.01% and 95% loan-to-value, insurers allow non-traditional down payment sources — funds borrowed via personal loan or line of credit — for borrowers with a strong credit history, rather than requiring the down payment to come entirely from the borrower's own resources or a gift. This flexibility is not free: CMHC's own premium schedule charges a materially higher premium rate at that LTV tier — 4.50% of the loan amount for a non-traditional down payment versus 4.00% for a traditional one at the same 90.01–95% band. It is a legitimate path for a client without family support, but the client should understand upfront that it costs more, not just that it is possible.
Because mortgage brokers are now FINTRAC reporting entities, any down payment source that looks unusual — a large cash deposit, funds arriving from outside Canada, a source that does not match the client's known financial profile — needs the same explanation-and-documentation discipline covered in the file hygiene module. This is not extra paperwork invented by a cautious underwriter; it is a standing compliance obligation the whole industry now carries.
A client is putting down a non-traditional (borrowed) down payment on a purchase at 92% loan-to-value. What should they understand about the premium?
Insurers permit borrowed down payments for 1-2 unit properties at 90.01-95% LTV for borrowers with strong credit, but price the added risk with a higher premium rate than the traditional-source premium at the identical LTV band. Saying it is never permitted overstates the restriction, and saying it costs the same or less misstates how the premium schedule actually treats it.
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