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  • Writer's pictureLendX Financial

How to Get a Down Payment For a House in Canada

Most prospective home buyers take up a mortgage to finance their homes. Even though you may get a loan for your new home, the down payment will have to be made by you and is not part of the mortgage. Down payment is a payment made up-front to buy assets such as a house, a car et al and is mostly paid in cash. The lender, thus, gets assured you will be up to pay the mortgage instalments for the loan in whole and on the stipulated time.

But most people with financial struggles or new wage-earning people find it tough to cough up cash for making the above said down payment. In order to avail a traditional mortgage, the minimum down payment to be made in Canada is 20% of the cost of the home. But while going for the non-conventional options available, one can make a smaller down payment as low as 5 % only.

If you are one of the prospective home buyers here's what you can do to come up with the said amount for down payment:

Registered Retirement Savings Plan

If you have some savings via your RRSPs you could use them as a down payment towards your new home. This amount is not taxable if it has been in the RRSP account for 90 days or more. This money, however, needs to be paid back over a period of time.


This is the source that makes you understand your own financial position and you can check if you are in a position to make a down payment or not. If your personal savings are in the form of bank investments such as fixed deposits or mutual funds, all you need to do is ensure that liquid cash is available freely to you when the time comes to make the down payment.

Help/Gifts From Family

It is not unheard of that couples looking to buy a home turn to family for helping with down payments. Lenders, on their part, accept such payments as 'gifts'. To make this into a legal transaction, a 'gift letter' needs to be signed by both the parties.

Borrow Money

You could borrow money to make your down payment but you would first have to check if the kind of mortgage you have applied for allows down payment through borrowed money. But if you are backed by substantial income and maintain a good credit score you could still borrow funds for your down payment. In fact, some mortgage insurers have specific plans customized towards helping buyers without sufficient funds for their down payment. Such money can be used towards covering the many costs involved while buying a home. These could include land transfer taxes, taxes on mortgage insurance premium, legal fees etc.

Borrowing money may sound like a relief to you if you are desperately looking for funds to make a down payment, we must warn you that such borrowing will lead to a hike in your debt-to-income ratio. Your debt will be higher than what you earn.

If you need help with down payment related issues, we would be happy to help.

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