This article was originally published on RBC Discover & Learn and has been republished here with permission.
When buying a home, the purchase price is covered through two main financial sources: Your down payment and your mortgage. But how much do you really need to put down? The short answer is, it depends.
For properties valued at less than $500,000 you can use 5% down.
For properties valued between $500,000 and $1.5 million, the minimum down payment for new insured mortgages increased from 5% to 10% for the portion of the house price above $500,000.
And for property values over $1.5 million still require a 20 percent down payment.
Calculate Your Required Down Payment Under The Canadian Rules
Here’s How it Works
Price Tier: Up to $500,000
Down Payment Required: 5% of house price
Price Tier: $500,001 to $1,499,999
Down Payment Required: 5% of first $500k + 10% portion of house price above $500k
Price Tier: $1,500,000+
Down Payment Required: 20% of house price
What Does This Look Like in Practice?
Read on to see required down payment calculations in action — based on your purchase price tier.
Homes Below $500,000
You need a minimum down payment of 5% of the purchase price. Regardless of home price, a down payment of less than 20% means you’ll require mortgage default insurance.1
Calculate It
Price Tier: Up to $500,000
5% x $400,000 (HOME PRICE) = $20,000 Down Payment
Homes Between $500,001 and $1.5 million
Homes between $500,001 and $1.5 million — a common price range for “starter” homes in the Vancouver and Toronto housing markets.1
Calculate It
- Home Price $750,000
- Down Payment: $50,000
Price Tier: $500,001 to $1,499,999
5% x $500,000 + 10% x $250,000 (HOME PRICE) = $50,000 Down Payment
On a $750,000 home, you’ll need $50,000 for your down payment. This is based on 5% of $500,000, plus another 10% of the amount over $500,000.
So How Much More Do We Need to Put Down?
Increase in down payment required on a $750,000 home is $12,500 ($50,000 is the required down payment).
Homes Over $1.5 million
If you’re buying a home over $1.5 million in Canada, you’ll still need at least $20% down.1
Calculate It
- Home Price $1,500,000
- Down Payment: $300,000
Price Tier: $1,500,000+
20% x $1,500,000 (HOME PRICE) = $300,000 Down Payment