Your down payment and mortgage terms determine how much home you can afford, what your monthly payment will be, and how much interest you pay over the life of the loan. This module walks through Canada’s tiered down payment rules, mortgage insurance, rate types, lender qualification ratios, and the pre-approval process — everything you need before making an offer.
If you have been building savings through an FHSA or RRSP Home Buyers’ Plan, this is where those funds connect to your purchase. Use our mortgage calculator and affordability calculator alongside these guides to model your numbers.
What This Module Covers
1. Down Payment Rules
Canada’s tiered minimums — 5% on the first $500,000, 10% on the portion up to $1.5M, and 20% above — with worked examples and acceptable sources of funds.
2. CMHC Mortgage Insurance
When mortgage default insurance is required, how premiums are calculated (2.8% to 4.0%), and how the cost is added to your mortgage balance.
3. Fixed vs. Variable Rates
Payment predictability vs. potential savings, trigger rates, and why most first-time buyers start with a fixed rate.
4. Amortization
25-year vs. 30-year schedules, how amortization affects total interest paid, and insured-mortgage limits.
5. Getting Pre-Approved
What pre-approval includes, rate holds (90–120 days), documents to gather, and how it differs from final approval.
6. GDS & TDS Ratios
How lenders calculate your debt service ratios (39% GDS / 44% TDS limits) and strategies to improve them.
7. Choosing a Mortgage Provider
Mortgage broker vs. bank, what to compare beyond the rate, and questions to ask before you commit.
8. Self-Employed Buyers
Income documentation, stated-income programs, and how to strengthen a self-employed mortgage application.
Quick Reference: Minimum Down Payment
| Purchase Price | Minimum Down Payment |
|---|---|
| Under $500,000 | 5% of purchase price |
| $500K – $1.5M | 5% on first $500K + 10% on remainder |
| $1.5M and above | 20% of purchase price |
Down payments under 20% require CMHC insurance. All mortgages must pass the stress test — lenders qualify you at the higher of your contract rate + 2% or 5.25%.
How much cash do you actually need?
Canada's tiered down payment rules plus CMHC can change your target. Get a personalized estimate.
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