Last updated: May 2019
I hear this question often, so here's a recap of the general down payment requirements for residential mortgages in Canada.
- 5% is the minimum down payment for a borrower who will OCCUPY the property, can prove his or her reliable income, and has reasonable credit. Family members can gift the borrower their down payment if they don't have enough in their savings, tax returns, RRSPs, or TFSAs.
- ZERO down payment can be synthesized by combining a 5% down mortgage with a borrowed down payment from a line of credit. The borrower must have great credit, and a great job with good income.
- 10% is the minimum down payment for a self-employed borrower who will OCCUPY the property and DOES NOT show enough income on his or her Personal Tax return (stated income - must be reasonable). Self-employed who show enough income on taxes are 5%.
- 20% down is required to avoid CMHC mortgage default insurance in most cases. In rural areas, lenders will still want CMHC loan default insurance, but usually at lender's expense.
- 20% to 25% down is required for RENTAL properties. Some lenders will allow a portion of that (half) from a borrowed source, including a vendor-take-back mortgage.
- 20% to 25% down is min required for some one who CAN NOT qualify for CMHC-insured lending, such as some who has credit issues, and rates are higher.
- 35% is the down payment required for someone who cannot really document their income (equity lending), and rates are higher.
- 50% is normal down for bare/raw land, but I know one lender who might reduce this to 20% down, OAC.
- Acreages are tricky with only 5% down, but doable if you understand the rules.
- If I am missing something, contact me!