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Mortgage Down Payment Calculator

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Mortgage down payment calculator

With nesto’s mortgage down payment calculator, we make it easy to figure out the minimum down payment in Ontario, BC, Alberta, Quebec or wherever you plan to make your home in Canada.  Just as our mortgage calculator helps you calculate your mortgage payment when you know your amortization period and mortgage term, our mortgage down payment calculator helps you figure out your down payment.

How much is a house down payment? Can you buy a house without a down payment in Canada? These are some of the top questions people ask when learning to seek out down payment calculators in Ontario, Quebec, BC and Alberta – or anywhere else they call home in Canada. 

Below you will find our answers to many questions about down payment.  We have also added a portion on prepayment options – using these to your advantage can make it easier to reduce your total interest over the life of your mortgage if you do not have the money at the time of purchase.

Mortgage down payments

The size of your down payment will determine your loan-to-value (LTV) ratio and whether you must also purchase mortgage default insurance. LTV is most important to mortgage rate pricing with insured or insurable lending criteria.

Insured and insurable mortgage rate pricing applies on properties valued at less than $1,000,000; the amortization is up to 25 years. In such cases, the mortgage lender will provide a better rate as there is a lower risk of loss due to default insurance. 

You would need to purchase the insurance on the front end (borrower-paid) in the case of an insured purchase with less than a 20% down payment. To give you a lower rate, lenders can also purchase the insurance on the back end (lender-paid) to lower the default risk on the mortgage if your down payment is more than 20%. 

An insured mortgage is qualified as such when your down payment is less than 20%. Therefore, you will need to purchase default (high ratio) insurance. Although this insurance is added to your mortgage, the taxes (PST) on purchasing this insurance are not. 

Your solicitor will collect and remit the PST on behalf of the high ratio insurer (CMHC, Sagen or Canada Guaranty) upon your closing. Once the high ratio default insurance is purchased from one of the three default insurers, the risk to the lender is reduced as the default insurance will protect them in case of default. 

All things being equal, the lowest rate, in this case, will be an insured purchase or insured transfer, where default insurance was purchased with the home by the borrower. 

Second, there is an insurable criterion with mortgage finance companies that do not exist with large banks. If you put down 20% or more with a purchase price of less than $1,000,000, having an amortization of up to 25 years, then your mortgage will be priced based on an insurable sliding scale – meaning the more down payment, the lower the mortgage interest rate. 

The second-best rate applies to purchases and renewals with 35% or more equity or down payment – meaning 65% loan-to-value (LTV) will get you the second-best mortgage rate. This is because the lender will buy the default insurance on the back end, and the cost is insignificant, with 35% or more equity. The rate increases until the worst pricing occur at exactly 80% LTV with 20% equity or down payment.

Loan-to-ValuePremium on Total Loan
Up to and including 65%0.60%
65.01% to 75%1.70%
75.01% to 80%2.40%
80.01% to 85%2.80%
85.01% to 90%3.10%
90.01% to 95%4.00%
Source: CMHC mortgage loan insurance costs

Prepayment options

Think of prepayments as a down payment that you can apply later or overtime.  Using nesto’s generous prepayment options can help you reduce your overall mortgage interest over the life of your mortgage.

Prepayment privileges (or options) enable you to make extra payments directly to pay off your principal. Prepayment options come in many forms and have different limitations based on your lender, but overall if you choose to exercise them, they will save you time and money so you can become mortgage free faster.

There are several ways you can take advantage of prepayments, including

  • Lump-sum payments – This option will come either in the form of one single lump sum up to 10%, 15%, or 20% either once in a year or once a year on the anniversary date of the mortgage; or very liberally you can make multiple lump sum payments throughout the year without exceeding the allowable amount.
  • Double Up Payments – This option lets you automate the lump sum payments to double up and match your regularly scheduled payments. The savings will be exponential if you’re already on an accelerated payment plan.
  • Increase regular payments – If you have any prepayment privileges with your mortgage, you will have a corresponding option for lump sum payments that will let you increase your regular payments by the same percentage on the anniversary date.
  • Payment frequency – This option lets you accelerate your weekly or biweekly payment. This means, for biweekly accelerated payments, the same semi-monthly payment amount is applied 26 times a year. In contrast, weekly accelerated payments are just half the same semi-monthly but applied 52 times a year. Although technically not considered a prepayment privilege, accelerated payments can shave off a couple of years of interest over the life of the mortgage. 

How much do you need for a down payment on a house?

You will need a minimum down payment of 5% of the property value on properties priced or appraised up to $500,000 and 10% on the rest up to a maximum of $1 million.  You’ll need a minimum of 20% down payment on properties priced or appraised for more than $1 million. You’ll also need a minimum of 20% down payment if you choose to have an amortization over 25 years, or the property will be used for rental or investment purposes.

How to calculate your minimum down payment without a down payment calculator 

With the following examples, you’ll be able to calculate exactly how much you need for a down payment on a house without a down payment calculator:

Example down payment calculation: you purchase a home for $500,000 or less

$500,000 x 5% = $500,000 x 0.05 = $25,000

Example down payment calculation: you purchase a home for $700,000

$500,000 x 5% + $200,000 x 10%  = $500,000 x 0.05 + $200,000 x 0.10 = $25,000 + $20,000 = $45,000

Example down payment calculation: you purchase a home for $1,100,000 

$1,100,000 x 20%  = $1,100,000 x 0.20% = $220,000

How your down payment impacts home affordability

1) The down payment you select has an impact on the home you can afford

Your down payment will limit your buying power.  For example, let’s say you have $100,000 saved earmarked for your down payment. Simple calculations to show you how to calculate your down payment without a down payment calculator.

$100,000 / 20% = $100,000 / 0.20 = $500,000

You could put down 20% and get a 30-year mortgage on a maximum purchase price of $500,000.

$100,000 / 10% = $100,000 / 0.10 = $1,000,000 

But you know that if your purchase price is $1,000,000 or more, you have to put in 20%, so you’re limited to a maximum purchase price of $999,999.

2) The down payment can make your monthly payments higher or lower

The higher your down payment, the less amount of mortgage you’ll need. So if you have $100,000 saved earmarked for your down payment but only need a mortgage of $500,000, then you could put the minimum down payment of 5%, or the whole amount.

$500,000 x 0.05 = $25,000  

Mortgage needed $500,000 – $25,000 = $475,000

Mortgage needed $500,000 – $100,000 = $400,000

Not a math whiz? Leave the math to us! When using a down payment calculator, you can automatically see the increase or decrease in monthly payments. 

3) Your down payment determines if you’ll have to pay CMHC mortgage loan insurance

If your down payment is less than 20% of the purchase price, you will need to purchase default mortgage insurance from CMHC (or one of the other default insurers, such as Sagen or Canada Guaranty).

An insured mortgage is qualified as such when your down payment is less than 20%. Therefore, you will need to purchase default (high ratio) insurance. Once the high ratio insurance is purchased from one of the three default insurers, the risk to the lender is reduced as the default insurance will protect them in case of default.

What is CMHC mortgage loan insurance?

CMHC stands for Canada Mortgage and Housing Corporation — a crown corporation that insures against the possibility of default on most of Canada’s prime (A lending) mortgages. There are 2 other mortgage default insurance providers though they are privately owned: Sagen and Canada Guaranty.  

Mortgage Default Insurance protects the lender if the borrower defaults or cannot pay their mortgage.  The cost of default insurance ranges between 2.8% to 4% of the mortgaged amount. This cost can be paid in cash or added to your mortgage balance – upon qualification, as the total mortgage you can carry still needs to meet certain criteria.

How First-Time Home-Buying (FTHB) Programs help with your down payment

The federal government, provincial and territorial governments, and some municipalities have various programs to help you with your down payment. Some programs require that you fully repay the loan, while others are interest-free.  Check with your province, territory or municipality for their down payment assistance programs. 

The Government of Canada provides various rebates, incentives and grants in conjunction with the provinces and territories.  Canada Housing and Mortgage Corporation (CMHC) has outlined these programs on its website. Although the homebuying journey and costs can be overwhelming, our goal at nesto is to simplify it for you here.

The Home Buyers’ Amount offers a $5,000 non-refundable income tax credit on a qualifying home acquired during the year. The credit will provide up to $750 in federal tax relief for an eligible individual. 

GST/HST New Housing Rebate provides a refund on the part of the GST or HST that you paid on the purchase price or cost of building your new house, on the cost of substantially renovating or building a major addition to your existing house, or on converting a non-residential property into a house. 

The Canada Greener Homes grants are helping Canadian homeowners across the country improve the energy efficiency of their homes and reduce their energy bills. Eligible homeowners can receive grants to make energy-efficient retrofits to their homes. 

The Home Buyers’ Plan (HBP)

The Home Buyers’ Plan (HBP) is a program that allows you to withdraw up to $35,000 in a calendar year from your registered retirement savings plans (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability. 

First-time home buyer incentive

The First-Time Home Buyer Incentive (FTHBI) helps first-time homebuyers without adding to their financial burdens. Eligible first-time homebuyers with the minimum down payment for an insured mortgage can apply to finance a portion of their home purchase through a shared equity mortgage with the Government of Canada. 

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