A mortgage down payment is the money you commit to the purchase of a property, paid upfront. It is expressed as a percentage of the property price, with 5% being the minimum requirement. For mortgage down payments less than 20% CMHC Insurance is required, which is normally added to the mortgage amount. Premiums are calculated as a percentage of the property price and vary for mortgage down payments of 5% - 9.99%, 10% - 14.99% and 15% - 19.99%. The greater the mortgage down payment the less of an insurance premium you’ll have to pay.
Different property types have distinct mortgage down payment requirements. For example, a single-family home must have a down payment of 5%; a rental property and a property costing more than $1 million must have a down payment of 20% and a property with 5 or more units must have a down payment of 15%.
A mortgage down payment helps you determine the maximum cost of property that you can afford. By dividing the mortgage down payment you have saved by the minimum down payment requirement helps you figure out how much you can afford to spend on a property. The larger the down payment the more you can spend on the property.
Any source that is arm’s length to and not tied to the purchase or sale of the property, such as:
The borrower must have good credit and adequate income to be able to borrow funds for the mortgage down payment
Using non-traditional mortgage down payment options will result in a higher CMHC insurance premium for mortgage down payments 5% to 9.99%.
Source: Canada Mortgage and Housing Corporation (CMHC)