TL;DR
Most expensive mistakes happen when buyers optimize for offer speed and under-plan final cash-to-close reality.
Current down-payment baseline in Canada
FCAC and federal policy resources show Canada's minimum down payment framework is tiered by purchase price. Finance Canada also confirmed reforms in force on December 15, 2024, including a higher insured mortgage cap and broader insured 30-year amortization eligibility for specific buyer segments.
| Purchase price band | Common minimum down payment framework | Planning implication |
|---|---|---|
| Up to $500,000 | 5% minimum | Insured path can preserve liquidity, but premium and total cost still matter. |
| $500,000 to $1.5 million | 5% on first $500,000 + 10% on remainder (when eligible) | Cash requirement rises quickly; accurate cash-to-close planning is essential. |
| Above insured cap | Typically 20% minimum and uninsured structure | Higher equity lowers insurance cost exposure but can tighten liquidity if poorly planned. |
Down payment vs cash to close: the distinction that protects your file
Minimum down payment is only one input. Your file still needs closing costs, legal adjustments, and reserve liquidity to stay stable through closing.
Cash to close = down payment + closing costs + adjustments + reserve buffer.
Gifted down payment and document readiness
Gift funds can support eligibility when properly documented. Borrowers should verify source-of-funds requirements early because missing gift paperwork can delay otherwise strong files.
Practical rule: treat documentation quality as part of your down payment strength, not a separate step.
Alternative paths if your down payment feels tight
Use an alternatives framework instead of forcing one weak path
- Minimum-down insured path: buy sooner while preserving more liquid cash for closing and early ownership costs.
- Higher-equity path: increase down payment to reduce financing risk and premium exposure where applicable.
- Timeline-reset path: delay 60 to 120 days to build stronger funds and cleaner documentation.
- Price-band reset path: target a lower purchase range to preserve affordability and execution certainty.
The best option is the one that still closes cleanly under less-than-perfect conditions.
Decision psychology: traps that create down-payment stress
- Anchoring: fixating on list price and underweighting total upfront cash required.
- Present bias: prioritizing immediate offer speed over closing-week resilience.
- Status-quo bias: repeating old rules without confirming current insured thresholds and policy updates.
- Regret aversion: avoiding hard budget decisions until timeline pressure removes options.
Countermove: run one scorecard for affordability, cash-to-close certainty, and document readiness before submitting offers.
90-30-7 day down-payment execution plan
90 days out
map target price bands and run minimum down payment plus insurer premium scenarios.
30 days out
finalize gift/source-of-funds documentation and verify cash-to-close assumptions.
7 days out
reconcile final legal numbers and confirm funds are in the right account and timeline.
Best next step
If you are actively shopping, decide your maximum purchase range using full cash-to-close math, not minimum down payment alone.
