How much down payment do you need to buy a home in Ottawa? — the minimum, the 20% question, and where the money comes from

How much down payment do you need in Ottawa? It is usually the first question anyone asks — how much do I need to buy a house in Ottawa — and the rule itself is federal. Ottawa does not set it, and it is the same here as in Sudbury. What is local is what the rule costs you, because the minimum is not a flat percentage. It steps at $500,000, and a very large share of what actually sells in Ottawa sits either side of that line.

The short answer is 5% of the first $500,000 and 10% of everything above it, up to a price of $1.5 million, at which point mortgage loan insurance stops being available and you need 20%. The longer answer is that the minimum down payment is rarely the number that decides anything. What decides things is the premium you pay for going in under 20%, the part of that premium Ontario makes you find in cash, and whether the money is sitting somewhere the tax system will let you take it from in time.

The minimum down payment, by purchase price

CMHC states the thresholds plainly: a minimum of 5% where the home costs $500,000 or less, and above that, 5% on the first $500,000 with 10% on the remainder. And then a hard stop — in CMHC’s own words, “If the home costs $1,500,000 or more, mortgage loan insurance is not available.” No insurance means no high-ratio mortgage, which in practice means at least 20% down.

The step at $500,000 is the part that catches people out

Below $500,000 every extra $100,000 of price adds $5,000 to the minimum. Above it, the same $100,000 adds $10,000. The marginal rate doubles at the line, so shopping “just a bit higher” costs twice as much in down payment as buyers tend to assume.

Moving from a $500,000 home to a $700,000 one is a 40% increase in price and an 80% increase in the down payment — $25,000 becomes $45,000. In a city where the same money buys very different things depending on which side of the Greenbelt you are on, that step is worth knowing before you set a search range. Our guide to what a budget buys across Ottawa is the other half of that decision.

What 20% down actually buys you

One thing, and it is a large one: it removes the mortgage insurance premium entirely. Under 20% down, mortgage loan insurance is mandatory, you pay the premium, and the lender is the party insured. That is not a technicality — it is the whole design, and we have written about it separately in CMHC, explained.

The premium is a percentage of the mortgage, and it rises sharply as the down payment shrinks. CMHC’s standard schedule for homeowner loans:

Note the first three rows. At 20% down or more the premium column still shows a number, but you do not pay it — those bands exist for borrowers who choose or are required to insure a low-ratio mortgage. At 20% down and above, on an ordinary purchase, there is no premium at all.

Note the last row too, because it is the one nobody mentions. A non-traditional down payment — borrowed money rather than your own savings or a gift — is priced at 4.50% instead of 4.00%. Borrowing the down payment is not free, and it is not free twice.

The premium is normally added to the mortgage rather than paid at closing, which sounds like relief and is really a deferral: you pay interest on it for the life of the loan. On the example above, $24,400 rolled into a 25-year mortgage costs materially more than $24,400.

Ontario taxes the premium, and that part is cash

This is the single most under-reported line in a first purchase, and it is specific to living here. CMHC is explicit:

Some provinces (currently Ontario, Quebec and Saskatchewan) apply provincial sales tax to the mortgage loan insurance premium. The sales tax can’t be added to the loan amount.

CMHC, premium information for homeowner loans

Ontario’s Retail Sales Tax on insurance premiums is eight per cent. So on a $24,400 premium you owe roughly $1,952 in cash on closing day — not financed, not amortised, not negotiable. It lands in the same week as the land transfer tax and the legal fees, and buyers who budgeted to the last dollar of their down payment are the ones who get caught. Ask your lawyer for the figure early.

Where the down payment can come from: the FHSA and the Home Buyers’ Plan

For a first purchase, most of the money now comes out of two registered plans, and they stack — the CRA confirms you can withdraw under the Home Buyers’ Plan and make a qualifying FHSA withdrawal for the same home.

• First Home Savings Account (FHSA). Your participation room in the year you open your first FHSA is $8,000, with a $40,000 lifetime limit and unused room carrying forward. Contributions are generally deductible, and a qualifying withdrawal to buy a first home is tax-free and never repaid.
• RRSP Home Buyers’ Plan (HBP). In the CRA’s words, “Currently, the HBP withdrawal limit is $60,000.” It is a loan from yourself: you have up to 15 years to repay it to your RRSP.
• A gift from family. Common, and permitted, but lenders require it documented as a gift and not a loan — see gifted down payment in the glossary. If it is really a loan, it is a non-traditional down payment, and you are back at the 4.50% premium row.

Between two first-time buyers, the two plans can reach a very large share of a $650,000 purchase — which is exactly why the conditions on them are worth reading before the money is needed rather than after.

Both plans punish being opened late — and one rule catches nearly everyone

A mortgage pre-approval does not unlock the Home Buyers’ Plan. The CRA states it flatly: “Obtaining a pre-approved mortgage is not considered a written agreement to buy or build a qualifying home and therefore will not satisfy this condition.” You need an accepted offer, not a pre-approval, before the withdrawal is eligible. People who move the money at pre-approval stage to feel ready have made an ordinary taxable RRSP withdrawal.

The rest of the traps, in the order they bite:

• The 89-day rule, and it is 89 and not 90. Contributions made to an RRSP in the 89-day period just before an HBP withdrawal from that RRSP may not be deductible. Funnelling a lump sum through an RRSP a month before closing to capture the deduction does not work.
• The FHSA has no minimum holding period. The CRA is explicit that there is no minimum number of days money must sit in an FHSA before a qualifying withdrawal — the opposite of the RRSP rule. What the FHSA punishes is opening the account late, because the $8,000 of room only begins the year you open it.
• The October 1 deadline. For both plans, the home generally has to be acquired or built before October 1 of the year after the year of the withdrawal.
• You must not already own it. An FHSA qualifying withdrawal requires that you have not acquired the home more than 30 days before withdrawing.
• You cannot repay an HBP withdrawal into your FHSA. The CRA says so in one line. HBP money goes back to an RRSP, PRPP or SPP, and nowhere else.
• Missing an HBP repayment is not a fine — it is income. Repay less than the minimum required in a year and the shortfall goes on line 12900 of your return as RRSP income, taxed at your marginal rate.

The 30-year amortization only exists if you are insured

One genuine counterweight to a small down payment. Since December 15, 2024, 30-year amortizations on insured mortgages are available to all first-time home buyers and all purchasers of newly built homes — the same reform that raised the insured price cap from $1 million to $1.5 million. The eligibility test is a loan-to-value above 80%, which is to say a down payment under 20%.

So the longer amortization is a feature of the insured world, not a reward for saving more. It lowers the monthly payment and increases the total interest, which is the trade every amortization decision makes. Our affordability calculator deliberately runs 25 years, because that is the conservative reading; if your lender offers 30, the payment falls and the lifetime cost rises.

A down payment is not a deposit

Two different sums, on two different dates, and confusing them is how people end up short. The deposit is paid within days of an accepted offer and is held in trust. The down payment is your total contribution to the price, due at closing. The deposit counts towards the down payment — it is not an extra amount on top. The distinction is set out in deposit vs down payment, and what a deposit does in an offer is covered in making an offer in Ottawa.

What else has to be in cash on closing day in Ottawa

The down payment is the largest number but never the only one. Lenders and lawyers call the whole figure the cash to close, and in Ottawa that list is:

• Ontario land transfer tax, on a sliding scale — and Ottawa has no municipal land transfer tax, unlike Toronto. That is a real local saving of thousands, and it is the rare case where buying here is structurally cheaper. First-time buyers can claim a refund of up to $4,000. Run it on the land transfer tax calculator.
• The 8% Ontario sales tax on your CMHC premium, if you are putting less than 20% down.
• Legal fees, title insurance, adjustments and the rest, which we cost out in Ottawa closing costs, explained and total on the closing costs calculator.
• A repair buffer for week one. Not a rule, just the thing every owner discovers.

The short version

1. 5% up to $500,000; 5% on the first $500,000 plus 10% above it; 20% at $1.5 million or more, where insurance stops being available.
2. The marginal rate doubles at $500,000 — a $700,000 home needs $45,000, not $35,000.
3. Under 20% down the premium is mandatory, reaching 4.00% of the mortgage at the 5% down band, or 4.50% if the down payment is borrowed.
4. Ontario’s 8% tax on that premium cannot be added to the loan. Budget it as cash.
5. The FHSA gives $8,000 a year to $40,000; the HBP gives $60,000, repayable over 15 years. They can both fund the same home.
6. A pre-approval is not a written agreement to buy, so it does not make an HBP withdrawal eligible. Wait for the accepted offer.
7. Ottawa charges no municipal land transfer tax, which is the one line where buying here costs less than the city everyone compares us to.

Sources

• CMHC — What is mortgage loan insurance (whom it protects, minimum down payment by price, the $1,500,000 limit)
• CMHC — Premium information for homeowner and small rental loans (the premium schedule, and provincial sales tax on the premium)
• CMHC — General requirements for homeowner mortgage loan insurance (GDS 39%, TDS 44%, maximum property value)
• Department of Finance Canada — Delivering the Boldest Mortgage Reforms in Decades (the $1.5M cap and 30-year insured amortization, effective December 15, 2024)
• Canada Revenue Agency — The Home Buyers’ Plan (the $60,000 withdrawal limit)
• Canada Revenue Agency — How to participate in the Home Buyers’ Plan (written agreement, and pre-approval not counting as one)
• Canada Revenue Agency — How to repay amounts withdrawn under the HBP (15 years, the deferral window, and repayment rules)
• Canada Revenue Agency — Home Buyers’ Plan and Lifelong Learning Plan withdrawals (the 89-day deduction rule)
• Canada Revenue Agency — Participating in your FHSAs ($8,000 a year, $40,000 lifetime)
• Canada Revenue Agency — Withdrawals and transfers out of your FHSAs (the qualifying withdrawal conditions)
• Ontario Ministry of Finance — Retail Sales Tax: insurance and benefits plans (eight per cent on insurance premiums)