How to finance a house in Canada: down payment, mortgage and what lenders check
Quick summary
Most people finance a house with a down payment from savings and a mortgage for the rest. The minimum down payment is 5% on a home up to $500,000, and it rises as the price rises. Lenders check your income, your debts and your credit report. Start by seeing what payment fits your budget with the mortgage payment calculator.
Checked November 10, 2026. Main source: FCAC: How much you need for a down payment (modified October 15, 2025, read November 10, 2026). See all 3 sources.
Key facts
- Minimum down payment, price up to $500,000
- 5% of the price
- Source: FCAC, How much you need for a down payment
- Down payment, price of $1.5 million or more
- 20% of the price
- Source: FCAC, How much you need for a down payment
- Housing costs, as a share of gross income
- About 39% or less
- Source: FCAC, Preparing for a mortgage
- All debt payments, as a share of gross income
- About 44% or less
- Source: FCAC, Preparing for a mortgage
The steps, in order
- Check your credit report and fix any errors. FCAC says a weak score could lead to a refusal or a request for a co-signer.
- Set a budget. Know what you can pay each month, not only what a lender may approve.
- Work out your down payment, and the extra cash you need for closing costs.
- Test your payment at a higher rate. Lenders do this, and it is called the stress test.
- Ask lenders or a mortgage broker for a pre-approval, then compare the offers.
- Choose a home and a mortgage, and have a lawyer or notary handle the closing.
Source: FCAC: Preparing for a mortgage (modified October 15, 2025, read November 10, 2026).
How much down payment you need
FCAC says some buyers need more, for example if you are self-employed or have a low credit score.
| Price of the home | Minimum down payment |
|---|---|
| $500,000 or less | 5% of the price |
| More than $500,000 and under $1.5 million | 5% of the first $500,000, plus 10% of the amount above $500,000 |
| $1.5 million or more | 20% of the price |
Source: FCAC: How much you need for a down payment (modified October 15, 2025, read November 10, 2026).
Mortgage default insurance
FCAC says this insurance protects the lender if you cannot make your payments. It does not protect you. It is typically needed when your down payment is under 20%, and a lender may ask for it even with 20% down.
The premium is 0.6% to 4.5% of the mortgage amount, and a bigger down payment lowers it. You can add the premium to your mortgage or pay it up front. Ontario, Manitoba and Quebec charge provincial sales tax on the premium, which you pay up front.
Source: FCAC: How much you need for a down payment (modified October 15, 2025, read November 10, 2026).
What lenders check
- Your income and your debts. FCAC suggests keeping housing costs (mortgage payment, property tax, heat and half of any condo fees) at about 39% of gross income or less.
- Your total debt payments, including housing, at about 44% of gross income or less.
- Your credit report and score.
- Whether you could still pay at a higher qualifying rate. FCAC says banks use the higher of 5.25% or your rate plus 2%.
Source: FCAC: Preparing for a mortgage (modified October 15, 2025, read November 10, 2026).
Term and amortization
The term is how long your mortgage contract lasts, and you renew at the end. The amortization is the total time to pay the mortgage off. FCAC says most Canadian mortgage holders have terms of 5 years or less.
A longer amortization lowers each payment but costs more interest. FCAC's example is a $300,000 mortgage at 4%. At 10 years it is about $3,033 a month and about $63,919 in interest. At 25 years it is about $1,578 a month and about $173,418 in interest.
With a down payment under 20%, FCAC says the longest amortization is 30 years for first-time buyers or new builds, and 25 years in other cases.
Source: FCAC: Mortgage terms and amortization (modified October 15, 2025, read November 10, 2026).
Programs that can help with the down payment
Two federal programs are built for this. Our guides explain how each one works, with sources.
Do not forget the other costs
- Land transfer tax, which depends on your province and the price.
- Legal fees, and an appraisal or inspection if your lender or you want one.
- Moving costs and the first bills for the new home.
Questions people ask
How do you finance a house in Canada?
Most buyers pay a down payment from savings and borrow the rest with a mortgage. Lenders check your income, debts and credit report, and they test your payment at a higher qualifying rate.
What is the minimum down payment in Canada?
FCAC says 5% of the price for a home of $500,000 or less. For a price between $500,000 and $1.5 million, it is 5% of the first $500,000 plus 10% of the rest. For $1.5 million or more it is 20%.
Do I need mortgage insurance?
FCAC says it is typically needed when your down payment is under 20%, and a lender may ask for it even with 20% down. It protects the lender, not you.
How much does mortgage insurance cost?
FCAC says the premium is 0.6% to 4.5% of the mortgage amount. A larger down payment lowers it.
How much of my income can go to housing?
FCAC suggests about 39% of gross income or less for housing costs, and about 44% or less for all debt payments including housing.
What is the stress test?
Lenders test whether you could still pay at a higher rate. FCAC says banks use the higher of 5.25% or your rate plus 2%.
What is the difference between term and amortization?
The term is how long your contract lasts. The amortization is how long it takes to pay the whole mortgage off.
What can I use for a down payment?
Savings are the usual source. Programs such as the FHSA and the Home Buyers' Plan can help. See our guides for the rules.