What down payment do you actually need?
A plain-language look at the down payment tiers, the FHSA, and the Home Buyers' Plan before you start house hunting.
Twenty percent is the number most people have heard, but it is not the legal minimum for most buyers. The real minimum depends on the purchase price, and two savings accounts can shrink the gap long before you make an offer.
The tiers that actually apply
For an insured mortgage, the minimum down payment is 5% on the first $500,000 of the purchase price, and 10% on the portion between $500,000 and $1.5 million. Above $1.5 million, mortgage insurance is no longer available and the minimum jumps to 20%. That $1.5 million cap took effect on December 15, 2024, replacing the previous $1 million threshold — details are published by the Department of Finance Canada.
On a $350,000 home, the minimum is $17,500. On a $600,000 home, the math splits into two tiers: $25,000 on the first $500,000, then $10,000 on the remaining $100,000, for a total of $35,000.
Your first tool: the FHSA
The First Home Savings Account (FHSA) lets you contribute up to $8,000 a year, with a lifetime cap of $40,000. Contributions are tax-deductible like an RRSP, and qualifying withdrawals are tax-free like a TFSA. The contribution and deduction rules are published by the Canada Revenue Agency.
Two years of maximum contributions cover most of the minimum down payment on a $350,000 home, before factoring in any other source of funds.
The Home Buyers' Plan, on top of it
The Home Buyers' Plan (HBP) lets you withdraw up to $60,000 from an RRSP tax-free at the time of withdrawal, provided you repay it over fifteen years. A couple buying their first home together can combine two HBP withdrawals and two FHSAs, which changes how much cash they actually need on hand once an offer is accepted. The full rules are published by the Canada Revenue Agency.
What I do with this math
My work starts before the offer: figuring out how much you truly need in hand at your target price, which order to draw on the FHSA and the HBP, and how to structure the file for the lender. If your numbers let you avoid mortgage insurance altogether, I will tell you that too — waiting a few months sometimes costs less than the premium.
The same discipline applies later, at mortgage renewal, where the first offer on the table is almost never the best one available.
A first conversation costs nothing and commits you to nothing. Reach out before you start touring homes.
Certain conditions may apply. Subject to change without notice.
Mortgage broker serving clients across Québec. Questions about your situation? The first call is free and takes 15 minutes.