By Bonnie Thorlakson, Mortgage Specialist — Kelowna, BC

The down payment is where most first-time buyers start, and it is the part of the mortgage process with the most moving pieces: minimum requirements, CMHC insurance thresholds, government programs, and the question of where the money can actually come from. This page covers all of it in one place.

Minimum Down Payment Requirements in Canada

Short answer: 5% on the first $500,000 of the purchase price, 10% on any portion between $500,001 and $1,499,999, and 20% minimum on properties at $1,500,000 or above. The insured mortgage cap is $1,500,000 — above that, no high-ratio mortgage is available regardless of the down payment percentage.

The down payment minimum is calculated in two tiers based on purchase price. The rules are straightforward, but the math trips people up when the price falls in a range that spans both tiers.

Purchase Price Minimum Down Payment Example
Up to $500,000 5% of purchase price $450,000 home: $22,500 minimum
$500,001 – $1,499,999 5% on first $500K + 10% on the remainder $750,000 home: $25,000 + $25,000 = $50,000 minimum
$1,500,000+ 20% minimum, no exceptions $1,600,000 home: $320,000 minimum
Kelowna reality check: For a $700,000 purchase — a realistic entry point for a townhome or smaller detached home in Kelowna — the minimum down payment is $45,000: 5% on the first $500,000 ($25,000) plus 10% on the remaining $200,000 ($20,000). On an $850,000 purchase, it is $60,000. These are minimums. They do not include closing costs, which are a separate line item.

A note on the $1,500,000 cap: this was raised from $1,000,000 in December 2024, opening insured mortgage access to a broader range of properties in markets like Kelowna where detached home prices regularly sit between $900,000 and $1,400,000. See the New Mortgage Rules 2025 page for details on this and other recent changes.

CMHC Mortgage Insurance — What It Is and What It Costs

Short answer: When your down payment is less than 20%, your mortgage is classified as high-ratio and must be insured through CMHC (or an approved equivalent). The insurance premium is added to your mortgage balance. It ranges from 2.80% to 4.00% depending on down payment size. In BC, you also owe 7% provincial sales tax on the premium amount at closing, out of pocket.

CMHC insurance protects the lender, not the buyer. It is what makes high-ratio lending possible — without it, lenders would not extend mortgages to buyers with less than 20% down. The premium is not a fee you pay upfront; it is added to your mortgage and amortized with the balance. The PST on the premium is a cash cost at closing.

Down Payment Percentage CMHC Premium Rate Premium on a $600,000 Mortgage
5% – 9.99% 4.00% $24,000 added to mortgage
10% – 14.99% 3.10% $18,600 added to mortgage
15% – 19.99% 2.80% $16,800 added to mortgage
20% or more No premium Conventional mortgage

Using the $700,000 purchase example: a 5% minimum down of $45,000 leaves a mortgage of $655,000. The CMHC premium at 4.00% is $26,200, added to the mortgage for a total balance of $681,200. The BC PST on that premium is $1,834, due at closing. That PST cannot be rolled into the mortgage.

A 10% down payment on the same purchase ($70,000) reduces the mortgage to $630,000 and the CMHC premium to $19,530 at 3.10%. The PST at closing drops to $1,367. Putting an additional $25,000 down saves roughly $7,000 in insurance costs over the life of the loan, plus reduces the ongoing mortgage balance and total interest paid.

For a full explanation of high-ratio mortgages and the complete premium table, see the high-ratio mortgages guide.

First Home Savings Account (FHSA)

Short answer: The FHSA lets first-time buyers contribute up to $8,000 per year (lifetime maximum $40,000), deduct those contributions from taxable income, and withdraw the full balance tax-free for a qualifying home purchase. It launched April 2023. The account must be open for at least one qualifying calendar year before you can make a tax-free withdrawal.

The FHSA is the most tax-efficient savings vehicle available to first-time buyers in Canada. Contributions work like an RRSP: they reduce your taxable income in the year you contribute. Qualifying withdrawals work like a TFSA: they come out completely tax-free. It is the only account that gives you both benefits simultaneously.

  • Annual contribution limit: $8,000
  • Lifetime contribution limit: $40,000
  • Unused contribution room carries forward (up to $8,000 per year, maximum $16,000 carry-forward in a single year)
  • Investment growth inside the FHSA is tax-sheltered
  • The account must be open for one qualifying calendar year before you can make a tax-free withdrawal
  • If unused, the FHSA can be transferred to your RRSP without affecting your RRSP contribution room
  • Eligible first-time buyers: cannot have owned a principal residence in the current year or the previous four calendar years
The most important thing about the FHSA: Open it as early as possible, even if you cannot contribute the full $8,000 yet. The one-year qualifying period starts from when the account is opened, not from when you make a substantial contribution. Opening the account with a nominal deposit today starts that clock. If you wait until you are ready to buy, you may be forced to wait an additional year before the withdrawal qualifies as tax-free.

The FHSA and the RRSP Home Buyers’ Plan can be used simultaneously on the same purchase. Many first-time buyers use both programs together to maximize their down payment from registered savings.

RRSP Home Buyers’ Plan

Short answer: The Home Buyers’ Plan (HBP) lets qualifying first-time buyers withdraw up to $35,000 from their RRSP tax-free toward a home purchase. A couple where both partners qualify can withdraw up to $70,000 combined. The withdrawn amount must be repaid to your RRSP over 15 years, starting two years after the year of withdrawal.

The HBP gives first-time buyers access to RRSP savings that would otherwise be locked up until retirement. The key rules:

  • Maximum withdrawal: $35,000 per eligible buyer ($70,000 for a qualifying couple)
  • The funds must have been in the RRSP for at least 90 days before the withdrawal date
  • Repayment begins two years after the year of withdrawal, spread over 15 years
  • If you do not make the required repayment in a given year, that year’s amount is added to your taxable income
  • The HBP limit was increased from $25,000 to $35,000 per person in the 2024 federal budget

HBP vs. FHSA: For new savings, the FHSA is generally more advantageous because there is no repayment obligation. However, if you already have significant RRSP savings and limited time to build an FHSA balance, the HBP is a meaningful tool and there is no reason not to use both. The programs are designed to be complementary.

First-Time Home Buyer Tax Credit

Short answer: The federal First-Time Home Buyer Tax Credit provides a $10,000 non-refundable tax credit in the year you purchase a qualifying first home, worth up to $1,500 in federal tax savings. It is not a cash payment. It reduces the federal income tax you owe in the year of purchase.

This is a simple credit that requires no advance planning: claim it on your income tax return for the calendar year of your purchase. The credit is calculated at the 15% federal tax rate on the $10,000 eligible amount, which produces up to $1,500 in tax reduction.

If you are purchasing with a partner, both can claim a share of the credit as long as the combined amount does not exceed $1,500. If your federal tax owing is less than $1,500, the credit reduces your tax to zero but does not generate a refund beyond that amount. It is not refundable.

First Home Buyer Incentive — Discontinued

This program is no longer available. The First Home Buyer Incentive (FHBI) was a federal shared equity mortgage program administered by CMHC. Applications for the program closed on March 21, 2024. If you are researching current programs for first-time buyers, the FHBI is not one of them.

The FHBI offered eligible first-time buyers a shared equity contribution from the government of 5% toward a resale purchase or 5%–10% toward a new construction purchase. In return, the government held a corresponding share of the property’s equity. It was never a widely used program in high-cost markets like Kelowna because the purchase price cap made it impractical for most local buyers.

The active first-time buyer programs in 2025 and 2026 are the FHSA, the RRSP Home Buyers’ Plan, and the First-Time Home Buyer Tax Credit. The FHBI is not one of them. If you are making a decision based on research that includes the FHBI, that information is out of date.

What Sources of Down Payment Do Lenders Accept?

Short answer: Personal savings with a 90-day paper trail, FHSA and RRSP HBP withdrawals, proceeds from the sale of an existing property, gifts from immediate family members (with a formal gift letter), and employer assistance programs in limited cases. Cash without a documented source is not acceptable. All funds need a documented origin.

The 90-day history requirement exists because lenders want to confirm the down payment has not been borrowed. A large deposit that appeared two weeks before closing raises a flag. The paper trail is not punitive — it is a documentation requirement. Planning ahead removes it as an issue.

Down Payment Source Documentation Required Notes
Personal savings 90-day bank statements showing accumulation history Must show deposits consistent with income or savings pattern
FHSA withdrawal FHSA account statement, Form RC727 (federal withdrawal form) Account must meet the one qualifying-year minimum
RRSP Home Buyers’ Plan RRSP account statement, HBP withdrawal confirmation Funds must have been in RRSP 90 days before withdrawal
Sale of existing property Executed sale agreement and statement of adjustments Bridge financing may be needed if sale and purchase dates do not align
Gift from immediate family Formal gift letter confirming amount is a gift with no repayment expected, plus donor’s bank statement showing the transfer Must come from parent, grandparent, sibling, or spouse; lender definitions vary slightly

If any part of your down payment comes from a source that might be questioned — a recent sale, a large gift, proceeds from another jurisdiction — bring it up in your pre-approval conversation before the funds move. Organizing the paper trail proactively takes a few minutes. Sorting it out after an underwriting request takes days and can create closing risk.

Down Payment in the Kelowna Market

Short answer: Most Kelowna purchases fall in the $600,000 to $1,200,000 range, which means minimum down payments of $43,000 to $95,000 depending on the price. The majority of first-time buyers in this market use high-ratio (under 20%) financing and pay the CMHC premium. Closing costs are separate from the down payment and need to be budgeted independently.

Kelowna is not a starter-price market. Condos and townhomes that represent genuine first-time buyer options are typically priced between $500,000 and $750,000. Detached homes in most established neighbourhoods start near $800,000 to $900,000 for smaller or older properties.

For a buyer targeting a $650,000 purchase:

  • Minimum down payment: $40,000 (5% of $500K + 10% of $150K)
  • Mortgage before CMHC premium: $610,000
  • CMHC premium at 4.00%: $24,400 (added to mortgage)
  • BC PST on premium (7%): $1,708 (due at closing, out of pocket)
  • Total mortgage: $634,400
  • Closing costs (legal, inspection, appraisal, tax adjustments): budget $7,000–$15,000 separately

The closing costs number trips people up because it is a cash requirement on top of the down payment. Showing up at closing with the down payment but not the closing costs is a genuine problem. Budget for both as separate line items.

The mortgage calculator lets you run different down payment and purchase price combinations to see what the monthly payment looks like at current rates. For a qualifying amount specific to your income and debt situation, a pre-approval conversation gives you the real number.

Common Questions About Down Payments

These are the questions Bonnie hears most often from buyers who are working through the down payment question for the first time.

Can I use a personal loan or line of credit as part of my down payment?

No. Borrowed money cannot be used as a down payment for an insured mortgage. If a lender sees a large personal loan or line of credit advance showing up in your bank statements around the time of your purchase, it raises questions about the source of funds and may disqualify the down payment. The down payment must come from sources that do not add to your overall debt load.

Does a larger down payment get me a better rate?

Not directly, in the way most people assume. Rates are primarily determined by the loan-to-value ratio, the mortgage type, and market conditions. Moving from 5% to 10% down lowers your CMHC premium, which reduces your total mortgage and your total interest paid — but does not typically produce a lower contract rate. The real benefit of a larger down payment is the reduced mortgage balance and the lower premium, not a rate improvement.

What if my down payment is a gift from my parents?

Gifted down payments from immediate family members are acceptable. The lender will require a formal gift letter signed by the donor confirming the amount is a gift with no expectation of repayment, along with a bank statement from the donor showing the transfer. “Immediate family” definitions vary slightly by lender, but typically include parents, grandparents, siblings, and spouses. Ask Bonnie about the specific lender’s requirements before funds are transferred, so the documentation is in order from the start.

Can I use the FHSA if I have already owned a home?

The FHSA is restricted to first-time buyers: you cannot have owned a principal residence at any time during the current year or the previous four calendar years. If you owned a home that you sold more than four calendar years ago, you may qualify again as a first-time buyer under the federal definition. The rules are specific. If your situation is anything other than straightforward, confirm your eligibility directly.

Is there a maximum down payment?

No. The maximum is whatever you can afford to put down. A 20% or larger down payment eliminates the CMHC premium and gives you a conventional mortgage. Beyond 20%, additional down payment reduces the mortgage balance and your ongoing interest costs but does not trigger further rule changes.