The down payment is often the largest single barrier between first-time buyers and homeownership. Understanding the minimum requirements, the insurance implications, and the tools available to build your down payment faster is the foundation of your buying strategy.
Federal Minimum Down Payment Rules
Canada's minimum down payment rules are set federally and apply across all provinces including Quebec:
- 5% for properties priced up to $500,000
- 10% on the portion of the price between $500,000 and $999,999
- 20% for properties priced at $1,000,000 or more (no CMHC insurance available above $999,999)
On a $650,000 Montreal condo: 5% of $500,000 = $25,000, plus 10% of $150,000 = $15,000. Minimum down payment: $40,000.
CMHC Mortgage Insurance
Any purchase with less than 20% down requires CMHC mortgage default insurance. The premium is added to your mortgage principal and ranges from 2.8% (10–19.99% down) to 4.0% (5–9.99% down). On a $600,000 purchase with 5% down ($30,000), the CMHC premium would be $22,800 - added to your mortgage balance.
Putting 20% down eliminates this cost entirely and reduces your monthly payment meaningfully. If your savings are close to 20%, it is often worth waiting the additional months to cross that threshold.
The First Home Savings Account (FHSA)
Introduced in 2023, the FHSA allows first-time buyers to contribute up to $8,000 per year (lifetime maximum $40,000) in a tax-sheltered account. Contributions are tax-deductible (like an RRSP), and withdrawals for a qualifying home purchase are tax-free (like a TFSA). For buyers with five or more years before purchase, the FHSA is one of the most powerful savings tools available in Canada.
The RRSP Home Buyers' Plan
First-time buyers can withdraw up to $35,000 per person ($70,000 per couple) from their RRSP for a home purchase under the Home Buyers' Plan. The funds must have been in the RRSP for at least 90 days. The amount must be repaid over 15 years, or it is treated as income. This remains one of the most commonly used down payment strategies for Montreal buyers.
Gifted Down Payments
Funds received as a gift from a direct family member are an acceptable source of down payment in Canada. The gift must be accompanied by a signed gift letter confirming the funds are non-repayable. Most lenders will also want to see the funds in your account for at least 15 days before the mortgage application.