The minimum down payment required is dependent on the type of purchase. If you are purchasing an owner-occupied property, you will need minimum 5%, if the purchase price is less than $1M. If you are purchasing a property greater than $1M, you will need minimum 20%. If you are purchasing a rental property, you will need a minimum 20%.

For down payments of less than 20%, mortgage default insurance is required. Mortgage default insurance is commonly referred to as CMHC insurance or fees. Note, default insurance protects the lender, not the borrower.

Not all down payments are created equal. Acceptable sources for your down payment include personal savings, cashing in investments, from the sale of property, or gift from immediate family. If you are first time home buyer, you can even withdraw up to $25,000 of your RRSP’s under the CRA’s Home Buyers’ Plan (HBP), tax-free. Not all lenders allow down payment funds to be borrowed (i.e. from a line of credit, a family member, a friend). Gifts from non-immediate family (i.e. friends), are not accepted.

To prove where your down payment is coming from, supporting documents will be required, dependent on where the down payment is coming from. If from savings, 90 days bank statements showing transactional history, the account number, your name, and the name of the institution will be required. If there are large non-payroll deposits showing, additional supporting documents will be required to prove where that money came from. If transferred from another account, 90 days history will be required for that account.

Your down payment will influence the home price you can qualify for, (i.e. if you only have $10,000 for your down payment, your maximum purchase will be limited to $200,000, even if your income would qualify you for greater).