Can I Buy a House Without a 20% Down Payment?
The biggest myth in Canadian real estate
One of the most common misconceptions among first-time home buyers is that you need to save a 20% down payment before buying a home.
For many Canadians living in Toronto, Vancouver, and other expensive markets, saving 20% can take years or even decades.
Fortunately, Canada's mortgage insurance system allows qualified buyers to purchase homes with much smaller down payments.
How much down payment do you actually need?
For owner-occupied properties, Canada's minimum down payment rules currently work as follows:
| Purchase Price | Minimum Down Payment |
|---|---|
| $500,000 or less | 5% |
| $500,000 to $1.5 million | 5% on first $500,000 + 10% on remainder |
| $1.5 million or more | 20% |
Real examples using today's rules
Purchase price: $500,000
Minimum down payment: 5%
Required down payment: $25,000
5% of first $500,000 = $25,000
10% of remaining $250,000 = $25,000
Total minimum down payment: $50,000
5% of first $500,000 = $25,000
10% of remaining $500,000 = $50,000
Total minimum down payment: $75,000
This means that many Canadians can buy much sooner than they originally expected.
What is an insured mortgage?
If your down payment is less than 20%, you will typically require mortgage default insurance.
In Canada, this insurance is offered by organizations such as:
- CMHC
- Sagen
- Canada Guaranty
This insurance protects the lender, not the borrower. However, it allows buyers to purchase a home with a smaller down payment.
How much does mortgage insurance cost?
The insurance premium depends on how much money you put down. Generally speaking:
| Down Payment | Insurance Premium |
|---|---|
| 5% | 4.00% |
| 10% | 3.10% |
| 15% | 2.80% |
Home price: $500,000
Down payment: 5% ($25,000)
Mortgage amount: $475,000
Insurance premium: 4% ($19,000)
Your final mortgage balance becomes approximately $494,000.
Why do many first-time buyers choose insured mortgages?
Despite the insurance premium, many buyers still prefer insured mortgages because they can:
- Buy sooner
- Enter the market before prices rise further
- Keep some emergency savings
- Benefit from competitive interest rates
- Avoid spending years saving 20%
In fact, insured mortgages often qualify for some of the lowest mortgage rates available.
What should buyers be careful about?
Buying with less than 20% down is not automatically the right choice for everyone.
Buyers should consider:
- Will I still have emergency savings after closing?
- Can I afford maintenance costs?
- Can I afford property taxes?
- Can I afford higher interest rates in the future?
- Am I buying because I'm ready, or because I'm afraid of missing out?
Should I wait until I have 20% down?
There is no universal answer.
For some buyers, saving 20% makes sense because:
- They avoid mortgage insurance premiums
- They reduce their monthly payment
- They borrow less money overall
For others, buying with 5% or 10% down may make more sense if waiting several more years could mean paying higher rents or higher home prices.
The real question first-time buyers should ask
"Can I buy with 5% down?"
Ask:
"Can I comfortably afford this home after I buy it?"
That's where calculators become more valuable than approval amounts.
Run your mortgage payment, total homeownership costs, and closing costs before making a decision.
Frequently Asked Questions
Can I buy a house with 5% down in Canada?
Yes. Many Canadians purchase homes with as little as 5% down through an insured mortgage program.
Do I need a 20% down payment to buy a house?
No. A 20% down payment is not required for many owner-occupied home purchases in Canada.
Does CMHC insurance protect me?
No. Mortgage default insurance protects the lender, but allows borrowers to purchase with smaller down payments.
Sources: CMHC, Financial Consumer Agency of Canada. Last updated: July 2026.