Down Payments Required When Purchasing a Home

Mortgage Tips Trish Pigott 26 Jun

Her is a little insight to minimum down payment requirements and the two types of mortgages that are available for home buyers.

High ratio mortgages are when you have less than 20% of the purchase price for down payment available.  Your mortgage is required to be insured by one of Canada’s three Mortgage insurers.  CMHC, Sagen or Canada Guaranty.  The insurance premiums are also scaled based on your down payment.  Mortgage insurance will apply and be added to the total mortgage amount. This is a Canadian requirement with all banks.  Here is a link to my Purchase Calculator so you can see what the cost is based on how much you have for down payment and insurance is required.

Conventional mortgages are when you have more than 20% of the purchase price for down payment. The 20% is calculated based on the total purchase price which allows you to avoid having to pay for mortgage insurance. For any purchase price over $1.5 million, you are required to have 20% down or more.

Rental properties also require a minimum of 20% down payment.

Down payment funds must be in your name for a minimum of 90 days and we require bank statements or investment statements confirming the funds are in your name.

If they are being gifted by an immediate family member, a gift letter is required for you and your family member to sign confirming that the gift does not require repayment, and the funds must be deposited into your bank account a minimum of 15 days prior to completion of the purchase. We will also require a printout of your bank statement showing the gifted funds deposited. The amount deposited must match the gift letter to the penny.

Interest rate rates are also set based on their down payment. For high ratio mortgages, there are often lower interest rates compared to conventional mortgages. Don’t be alarmed when you see different rates being offered and also don’t be fooled looking at advertisements online with rock-bottom interest rate rates and think that they apply to conventional mortgages.

The best way to navigate this is to contact us directly so we can walk you through the process step-by-step on how you will be affected with your upcoming purchase and what your minimum down payment requirements look like.

Bank of Canada Announces No Changes June 10, 2026

Latest News Trish Pigott 10 Jun

Today the Bank of Canada announced no changes to the overnight target rate. This is directly affecting the prime rate which all banks use to determine variable rate mortgages. Given the instability of our economy due to the events with the US and Iran war, the Bank of Canada is remaining cautious resulting in no changes today. Below is a summary from our call today with Dominion Lending Center’s own Chief Economist Dr Sherry Cooper and our President of Dominion Lending Centers, Eddy Cocciollo.

Today’s press conference was all about balancing two opposing forces on the Bank’s prime rate: rising inflation due to the increase in oil and gas prices, and the currently slumped Canadian economy.

On one hand, the Bank is considering increasing the rate to address inflation. However, so far there “has been limited evidence of broad-based pass-through of higher energy prices to other consumer prices”.

On the other hand, the Bank is considering decreasing the rate to stimulate the economy. However, it does look like the economy is “poised to return to return to growth in the second quarter of 2026”.

The other item of interest in Macklem’s address is CUSMA. Business outlook surveys have shown that Canadian business are done holding their breath on tariff news – and are getting on with business. There has been some increase in business investment which is great. Underlying the tension is a piece of calming news – the July 1st date isn’t a be-all-end-all in negotiations. CUSMA will remain in place through 2036 until it’s officially renegotiated.

Today Dr. Sherry Cooper gave us some great insights on the latest in the Canadian economy. Here’s what you should know:

  • Canada is not in a recession – it’s a mild, trade-induced soft patch, and growth is already starting to rebound
  • Canada is trading less with the US and more with other countries, thanks to our bounty of natural resources. Trade is trending upwards with the UK, the EU and China, and our exports to the US are down
  • We’re seeing a lot of tech companies announcing big volumes of layoffs and substituting AI for entry level and more basic jobs

Bottom Line

The Bank of Canada has shown its willingness to bolster the Canadian economy amid unprecedented trade uncertainty and a record oil price shock. Ottawa, too, has taken actions to reduce the burden of higher prices on Canadians by temporarily eliminating the excise tax on oil. PM Carney is also working to diversify Canada’s trade away from the US, a strategy that has thus far been remarkably successful. As the charts below show, Canadian export diversification is gaining momentum. In addition, goods imports are also shifting away from the US to the rest of the world.

We continue to maintain the view that the Bank of Canada will keep rates steady this year. If inflation broadens and accelerates, rate hikes are possible, but that is not our baseline forecast. The Bank of Canada will be reluctant to tighten into housing market weakness. While housing activity strengthened in May, momentum is muted, and affordability improvements are likely to taper off in the coming months as trade tensions and the war keep oil prices and interest rates elevated.

The above details and Bottom Line are provided by Dominion Lending Centres