Mortgage Down Payment

1. Understanding the Minimum Down Payment Rules

Canadian mortgage regulations require a minimum down payment based on the cost of the home:

  • Up to $500,000 → Minimum 5% of the purchase price.
  • From $500,000 up to $1,500,000 → 5% on the first $500,000 plus 10% on the remainder.
  • Above $1,500,000 → Minimum 20% of the full price (springfinancial.ca, surex.com, scotiabank.com).

For instance:

  • A $400,000 home → 5% down = $20,000.
  • A $750,000 property → 5% on $500k ($25,000) + 10% on $250k ($25,000) = $50,000 .

These rules apply across Canada

2. Why You Might Want to Put Down More Than the Minimum

Avoid Mortgage Loan Insurance (CMHC insurance):

If your down payment is less than 20%, you’ll have to pay for mortgage insurance (~0.6%–4.5% of your loan), which can be added to your mortgage or paid upfront (springfinancial.ca, surex.com, calgaryhomes.ca).

  • Lower Monthly Mortgage Payments & Interest Costs:

A larger down payment reduces the amount you borrow, saving you interest over time and reducing monthly costs (jengahomes.ca).

  • Stronger offers in competitive markets: Sellers often favor buyers who can offer higher down payments, implying stronger affordability and fewer financing risks (newhomesalberta.ca).

Most buyers in Alberta tend to aim for a 20% down payment even if not required by regulation, because of these long‑term benefits

3. First-Time Buyer Support & Down Payment Assistance Programs

Federal & Alberta-specific Programs

  • Home Buyers’ Plan (HBP):

Allows first-time buyers to withdraw up to $60,000 from your RRSP tax-free (must be repaid over 15 years) (nerdwallet.com).

  • First Home Savings Account (FHSA):

Tax-free savings account up to lifetime contribution $40,000, including annual limit $8,000.

  • First-Time Home Buyer Incentive (FTHBI):

The federal program offers shared equity assistance: up to 5% for resale homes or 10% for newly built homes. Repayment is proportional to sale price or after 25 years (en.wikipedia.org).

4. How Much Should You Aim to Save? Examples for Buyers

Home PriceMinimum Down PaymentAmount to Avoid Insurance (20%)
$400,0005% = $20,00020% = $80,000
$600,0005% on $500k +10% on $100k = $35,00020% = $120,000
$1,200,0005% on $500k +10% on $700k = $120,00020% = $240,000

Typical home prices across Alberta hover around $490,000–$500,000, making a 5% minimum down payment around $25,000. To avoid mortgage insurance, you would need about $100,000 on that same home value (scotiabank.com).

5. Smart Strategies for Saving & Strengthening Your Financial Readiness

Budget & Restructure

  • Track spending; cut non-essential costs like streaming services, eating out, or duplicate subscriptions.
  • Prioritize savings with automatic transfers (the “pay yourself first” method)

Eliminate High-interest Debt

  • Pay down credit cards and lines of credit first to improve credit score and affordability .

Use Available Tax-Advantaged Accounts

  • Maximize TFSA contributions to grow tax-free funds.
  • Use HBP from RRSP when ready to close to shore up your down payment without additional borrowing

Leverage Assistance Programs

  • If you’re a first-time buyer, explore PEBAC, Edmonton First Place, PEAK, FHSA, FTHBI—some programs let you buy with very little upfront capital (springfinancial.ca).

✅ Final Tips for Alberta Buyers

  • ✅ Minimum down payment is 5% for most homes under $1.5M, scaling up as the price increases.
  • ✅ Avoid mortgage insurance by aiming for a 20% down payment, but it’s optional for those who choose financing support.
  • ✅ Explore federal and Alberta-specific programs designed to assist first-time buyers with grants, loans, and tax-free savings vehicles.
  • ✅ Create a sensible savings plan: clear debt, budget rigorously, use accounts like FHSA/RRSP, and automate contributions.

🧭 In Summary

Although the minimum down payment rule starts at just 5%, aiming for 20% can save you thousands in mortgage insurance and reduce monthly mortgage payments. Fortunately, programs like FHSA, HBP, FTHBI, Edmonton First Place, and PEAK offer meaningful support for first-time buyers—even if you only have a few thousand dollars upfront.

When you’re buying, putting together a financial plan that blends disciplined savings, smart debt management, and savvy use of government programs will set you on the path to homeownership with confidence and clarity.

Buyer Resources

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