5% Down Payment NOT just for First Time Buyers

Canadian Mortgage Default Insurance

Buying a home but don’t have a 20% down payment? You’re definitely not alone.

Saving 20% can be a lot of money, and it simply isn’t realistic for many Canadians. That’s where Mortgage Default Insurance comes in.

It allows qualified buyers to purchase a home with less than 20% down.

And one of the biggest misconceptions? It’s not just for first-time home buyers.

How Does Mortgage Default Insurance Work?

If you purchase a home with less than 20% down, your mortgage will generally require default insurance.

You pay a one-time insurance premium, which is typically added directly to your mortgage rather than paid upfront.

The insurance protects the lender if you default on your mortgage. Generally, the larger your down payment, the lower the insurance premium.

Canada has three mortgage default insurers:

CMHC • Sagen • Canada Guaranty

What Is the Minimum Down Payment?

For an owner-occupied home, the minimum down payment is generally:

5% on the first $500,000

10% on the portion between $500,000 and $1.5 million

Homes priced at $1.5 million or more are not eligible for an insured mortgage and require at least 20% down.

Example

If you purchase a home for $600,000:

5% of the first $500,000 = $25,000

10% of the remaining $100,000 = $10,000

Minimum down payment = $35,000

Who Can Use the Minimum Down Payment?

Owner-Occupied Home

You may qualify for the minimum down payment even if you've owned a home before or currently own another property.

You do not need to be a first-time home buyer.

Second Home

Already own the home you live in?

You may still be able to purchase another property with an insured mortgage if the new property will be occupied by you or an eligible family member and meets the insurer's requirements.

Duplex or Other Multi-Unit Home

Buying a property with multiple units?

If you will be living in one of the units, you may be able to purchase the property with less than 20% down.

For example, you could purchase a duplex, live in one side and rent out the other.

The Bottom Line

You don't necessarily need 20% down to buy a home — and you don't need to be a first-time buyer either.

The amount you'll need depends on the purchase price, how the property will be used, and your overall mortgage qualification.

Not sure how much you would need for a specific property? Reach out to The Mortgage Duo and we can help you run the numbers.