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The First Hurdle: Saving That Big Lump Sum
For many immigrants—especially those juggling overseas obligations, rent, and work—saving enough for a down payment often feels like reaching across the Grand Canyon. In conversations across newcomer communities, the same lament pops up: “I pay rent, send money home, build a life; there’s nothing left to save.”
It’s so crazy that you not only have to worry about the amounts, but the moment you decide to buy, everything shifts. Yet to buy in Canada, that’s where you must start.
While the rules (5%, 10%, 20%) are crystal clear, the real challenge comes from converting that into reality. To put it in perspective: the national average home price in 2025 is around $693,300 (CREA data), down ~3.4% year-over-year. At 5% down, that’s ~$34,665. And that’s before we talk about closing costs, insurance, or taxes. If your income is mid-range or you’re supporting a family abroad, that figure looks intimidating, and that’s with a slight easing of prices.
Let’s break it down and see how newcomers are making it work.
The Rules in 2025: What You Must Know
Canada’s minimum down payment rules are simple, but the numbers can surprise anyone unfamiliar with the scene:
5% for homes priced up to $500,000.
5% on the first $500K + 10% on amounts above, up to $1.5M
Homes above $1.5M require 20% down and are ineligible for mortgage insurance
To illustrate: a $600,000 condo in Montreal calls for a $35,000 down payment; half of you may already have lost motivation just reading that number.
Again, add that to the already headache-inducing costs of living, foreign transfers, and no Canadian credit history.
However, as of December 2024, insured mortgages now apply to homes up to $1.5M; up from $1M. This change alone has made a difference for those eyeing hot markets like Vancouver or Toronto.
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A Glimpse at Regional Down Payments
Location can make or break affordability. Regional differences in home price massively impact the down payment you need. Here’s a look at some of the most prominent ones:
Region | Avg Home Price | Min 5% Down | Approx. 20% Down |
BC | $1,000,000 | $50,000 | $200,000 |
Alberta | ~$503,000 | $25,150 | $100,600 |
Quebec | ~$520,800 | $26,040 | $104,160 |
Maritimes | ~$320,000 | $16,000 | $64,000 |
National Avg | $668,097 | $33,405 |
Note that down payments over $70K are common in high-cost areas, but places like Halifax, Montreal, or smaller towns often demand much less. For instance;
Saskatchewan: ~$338,900 → 5% down just $16,945
New Brunswick & Newfoundland: same range, down payments under $18,000
These disparities explain why newcomers often buy in smaller cities first; Ottawa and Calgary too often have more approachable entry points, especially when your savings are limited.
The Hidden Cost: Mortgage Loan Insurance
If your down payment is less than 20%, Canadian law requires mortgage loan insurance, also known as default insurance. It doesn’t protect you, but rather protects the lender, in case you can’t make payments and the house doesn’t sell for enough. This insurance helps banks say "yes" to buyers with smaller upfront savings.
The mortgage insurance premium is usually between 0.6% and 4.5%, depending on how much you put down. Typically, a higher down payment means a lower premium. That means on a $500K home with 5% down, your premium can be $20,000+, added to your mortgage, and you pay interest on it.
Let’s try doing some extra math to buttress this:
Buying a $400,000 condo with 5% down? Premium is around $15,200. That turns your mortgage balance from $380K to $395K; and you pay interest on the insurance.
Double your down to 10%, premium drops to $11K. But that’s still a chunk that gets added stiffly to your costs.
Is It Optional? No.
Unless you can put down 20% or more, mortgage insurance is mandatory. Lenders won’t approve a mortgage without it if you don’t meet that threshold.
There are some exceptions, though. New 2025 CMHC rules have clarified criteria to make borrowing fairer for low-income or first-time buyers, but they do not eliminate the insurance requirement unless you hit the 20% down payment.
Bridging the Gap: Strategies to Help You
1. FHSA and HBP Combo
The First Home Savings Account (FHSA) is a newcomer-friendly hero. It allows you to save up to $8,000 per year, maxing out at $40,000 total. Over 484,000 Canadians opened one in 2023, with median contributions hitting $8,000.
On the other hand, the Home Buyers’ Plan (HBP) was also refreshed in 2025. Now you can withdraw up to $60,000 from your RRSP tax-free, and pay it back over 15 or 20 years.
Smart use of both programs could mean tens of thousands in down payment money with minimal tax impact. Some clever buyers “double-barrel,” stacking FHSA and HBP to unlock 5-figure down payments, without paying tax or interest.
2. Federal and Provincial Shovels
FHSA + HBP
Land Transfer Tax Rebates: Sometimes, you may live in a place/ province where the governments often soften the blow of closing costs. For instance, Ontario offers up to $4,000 in rebates, while Toronto’s got another $4,475 city-level credit. BC also has first-time buyer tax relief, and Quebec gives its residents a $1,500 credit.
New Down Payment Matching Pilot: In select provinces, a new federal program matches a portion of your down payment (up to $25K); as a grant, not a loan.
3. Extended Amortization = Lower Monthly
First-time buyers can now access 30-year amortizations on new homes (vs. the traditional 25 years), meaning monthly payments will drop.
In short:
Start with the FHSA to grow a down payment quickly and tax-efficiently.
If you have RRSP savings, the HBP can unlock them without a tax hit.
At closing, you might save thousands in rebates and credits.
If buying new, watch out for the proposed GST rebate; it could be a game-changer.
Newcomers’ Special Paths and Programs
Some banks offer Newcomer Mortgage Programs: if you’re a PR with low or no Canadian credit, you might still qualify with a 35% down payment, without needing any employment history.
CIBC, for instance, even requires 35% for conventional, but only 5% if insured. Yes, you need more cash, but it can bridge the credit/income gap early on.
Looking Ahead: Keep an Eye on Policy
Just when you think the rules are stable, they change. Experts caution that minimum down payment rules could increase, especially for high-value properties over $1M, but nothing is firm yet. If it happens, homes could require 20% down, raising initial costs by $25K+
Also, OSFI is enforcing stricter leverage limits, capping mortgages for highly indebted borrowers at 4.5x annual income, unless you're getting insured loans.
Wrapping It Up
For immigrants, saving for a down payment is both a financial and emotional journey. You’re balancing remittances, rent, credit-building, and still trying to put together $35K, $45K, or more. But it is not impossible.
Strategies like combining FHSA+HBP, using newcomer mortgage packages, navigating land transfer rebates, or even buying in lower-cost provinces can shift the scales in your favour.
You may not be building your dream home right away, but if you can get a foot in the door, that equity grows, and your options expand. That first modest purchase is often the smartest leap you’ll ever take.
👉 Next in the Series:
Credit Score in Canada (Guide for Immigrants)
Until next time,
