Buying a townhouse in Canada starts with one key question: how much down payment do you actually need?
In 2025, the answer changed significantly after the December 15, 2024 mortgage rule reforms. The federal government increased the insured mortgage price cap from $1 million to $1.5 million and expanded 30-year amortization eligibility to all first-time buyers. These changes made it easier for buyers especially in expensive markets like Toronto and Vancouver to purchase homes with less than 20% down.
However, the minimum down payment rule is only part of the picture. Buyers also need to understand CMHC insurance premiums, tax-advantaged savings accounts such as the FHSA and RRSP Home Buyers’ Plan, and the real costs in each Canadian housing market.
This guide explains exactly how much you need to buy a townhouse in Canada in 2025, including real numbers, strategies, and newcomer considerations.
-
Townhouse Monthly Expenses: The Real Cost of Owning a Townhouse
- Hidden Costs When Buying a Townhouse: What Most Buyers Don’t Budget For (2026 Guide)
- Understanding Townhouse Fees: A North American Real Estate Guide
- Exploring Townhouse and Townhome Investments: A Guide for North American Buyers
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📊 Canadian Down Payment Landscape — 2025 71% of Canadian first-time buyers say saving for a down payment is their biggest financial concern (CMHC Housing Insights 2024). Average down payment, first-time buyers: 15–18% (CMHC 2024). Maximum FHSA + RRSP HBP combined: $100,000 per person / $200,000 per couple. Dec 15, 2024 change: insured mortgage cap raised from $1M to $1.5M — opening insured financing to buyers who previously needed 20% down on million-dollar properties. 30-year amortization now available to all first-time buyers (not just new construction) on insured mortgages. Average townhouse price range nationally: $450,000 (Edmonton) to $1,300,000 (Metro Vancouver) in 2025. |
Canada's Down Payment Rules in 2025
The Two-Tier Minimum — How the Formula Works
Canada does not have a flat minimum down payment percentage. Instead, the minimum is calculated using a two-tier formula based on purchase price:
- 5% of the first $500,000 of the purchase price
- 10% of the portion between $500,001 and $1,499,999
- 20% minimum for any purchase price of $1,500,000 or more — no insurance available above this threshold
Simple formula for prices between $500,001 and $1,499,999:
Minimum Down = $25,000 + 10% × (Purchase Price − $500,000)
Example — $850,000 townhouse: $25,000 + 10% × $350,000 = $25,000 + $35,000 = $60,000 minimum down payment.
The December 15, 2024 Rule Changes — What's New
- Insured mortgage cap raised to $1.5 million (from $1 million): Buyers can now purchase homes up to $1,499,999 with less than 20% down. Previously, any purchase at or above $1 million required a full 20% down payment — $200,000 on a $1M property. Now, the minimum on a $1M townhouse is $75,000. This change directly benefits buyers in Vancouver and Toronto, where townhouse prices commonly exceed $1 million.
- 30-year amortization expanded to all first-time buyers: Previously, 30-year amortization was available only to buyers of newly constructed homes. As of December 15, 2024, all first-time buyers with an insured mortgage can amortize over 30 years. Lower monthly payments improve qualification under the stress test, but add roughly $60,000–$100,000 in interest over the life of a $600,000 mortgage compared to a 25-year amortization.
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📋 'First-Time Buyer' Definition for 30-Year Amortization A 'first-time home buyer' for purposes of the 30-year amortization is defined as: you have not owned a principal residence at any time in the current calendar year or the preceding four calendar years. Importantly, if you've been separated or divorced, you may qualify again. And if you've owned an investment property but never a principal residence, you still qualify. Confirm your specific situation with your mortgage broker — the definition has nuances that affect eligibility. |
Minimum Down Payment by Townhouse Price
Here is the complete breakdown of minimum down payments at key price points common in Canadian townhouse markets, with CMHC insurance premium calculations included:
|
Townhouse Price |
Minimum Down Payment (Insured — < 20%) |
Conventional Down (20% — no insurance) |
Key Notes — 2025 Rules |
|
$400,000 |
$20,000 (5%) |
$80,000 (20%) |
Insured: 5%. Eligible for 30-yr amortization if first-time buyer or new construction (since Dec 15, 2024). CMHC premium: 4.00% of mortgage = $15,200 added to mortgage. |
|
$500,000 |
$25,000 (5%) |
$100,000 (20%) |
Insured: 5% flat. At exactly $500K, the stepped formula doesn't apply yet. Premium: 4.00%. |
|
$600,000 |
$35,000 (5% of $500K + 10% of $100K) |
$120,000 (20%) |
Stepped formula applies above $500K: $25,000 + $10,000 = $35,000. CMHC premium: 3.10% of $565,000 mortgage = $17,515 added to loan. |
|
$700,000 |
$45,000 (5% of $500K + 10% of $200K) |
$140,000 (20%) |
Common Calgary/Ottawa townhouse price range. Insured minimum: $45,000. Premium: 3.10% of $655,000 = $20,305. |
|
$800,000 |
$55,000 (5% of $500K + 10% of $300K) |
$160,000 (20%) |
Common GTA/suburban Vancouver townhouse. Premium: 3.10% of $745,000 = $23,095. |
|
$900,000 |
$65,000 (5% of $500K + 10% of $400K) |
$180,000 (20%) |
GTA/GVA market range. Premium: 2.80% of $835,000 = $23,380. |
|
$1,000,000 |
$75,000 (5% of $500K + 10% of $500K) |
$200,000 (20%) |
Previously required 20% — now insurable under Dec 2024 rule change. Premium: 2.80% of $925,000 = $25,900. |
|
$1,200,000 |
$95,000 (5% of $500K + 10% of $700K) |
$240,000 (20%) |
Mid-range GTA/GVA townhouse. Premium: 2.80% of $1,105,000 = $30,940. |
|
$1,499,999 |
$124,999 (5% of $500K + 10% of $999,999) |
$299,999 (20%) |
Maximum insurable price under new rules. Above $1.5M: 20% minimum required, no insurance available. |
|
$1,500,000+ |
20% minimum (= $300,000+) |
N/A — 20% is the floor |
No CMHC insurance available. Conventional mortgage only. No 30-year amortization on insured product (conventional max is 30 years for most lenders). |
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💡 The $500K Threshold: Why It Matters The stepped formula means there is a significant difference in minimum down payment between a $499,999 townhouse and a $600,000 one. At $499,999: minimum down = $25,000 (5%). At $600,000: minimum down = $35,000 (5% of $500K + 10% of $100K). The $100K difference in price adds $10,000 to your minimum down payment — not just the 5% you might expect. Keep this in mind when evaluating listings priced just above the $500K threshold. |
CMHC Mortgage Insurance Premiums: The Real Cost of a Small Down Payment
CMHC mortgage insurance is mandatory when your down payment is less than 20%. The insurance protects the lender — not you — in case of default. You pay the premium, but the lender is the beneficiary. The premium is calculated as a percentage of the mortgage amount (purchase price minus down payment) and is typically added to the mortgage rather than paid upfront.
|
Down Payment % |
CMHC Premium Rate |
Real Cost Example — What It Means on a $700K Townhouse |
|
Less than 10% (5–9.99%) |
4.00% of mortgage amount |
On a $700K purchase with 5% down ($35K), mortgage = $665K. Premium = $26,600 — added to the mortgage, not paid upfront. Over 25 years at 5.25%, this costs ~$55,000 in additional interest. |
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10% to 14.99% |
3.10% of mortgage amount |
On a $700K purchase with 10% down ($70K), mortgage = $630K. Premium = $19,530. Lower premium saves meaningful interest vs. 5% down. |
|
15% to 19.99% |
2.80% of mortgage amount |
On a $700K purchase with 15% down ($105K), mortgage = $595K. Premium = $16,660. Lowest insured premium — close to conventional territory. |
|
20% or more |
0% — no premium |
Conventional mortgage. No insurance premium. Saves the entire premium amount but requires more cash upfront. |
Provincial sales tax on the premium: In Ontario and Quebec, provincial sales tax (PST/QST) applies to the CMHC premium itself — but unlike the premium, this tax cannot be added to the mortgage and must be paid upfront at closing. In Ontario: 8% PST on the premium. Example: on a $700K purchase with 5% down, premium = $26,600. Ontario PST on premium = $2,128 — due at closing in cash.
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⚠️ The True Cost of the Minimum 5% Down Payment On a $700,000 townhouse with 5% down ($35,000): CMHC premium = $26,600 added to mortgage. Over 25 years at 5.25%, that premium costs approximately $55,000 in additional interest. Total cost of choosing 5% over 20% down: ~$81,600 ($26,600 premium + ~$55,000 interest) plus the Ontario PST of $2,128. The minimum down payment is the cheapest path to ownership in upfront cash — but it is not the cheapest path over time. If you can save 10% or 15%, the reduction in premium and interest is substantial. |
Where Can Your Down Payment Come From? All Eligible Sources
Not all money is equally eligible as a down payment in Canada's insured mortgage system. CMHC and the major lenders have specific rules about where the funds can originate:
|
Source |
Maximum Amount |
Repayment Required? |
Rules, Conditions & Buyer Notes |
|
Personal savings (TFSA, non-registered) |
No limit on amount |
No repayment obligation |
The simplest and most flexible source. TFSA savings are ideal — withdrawals are tax-free, no repayment required, no conditions. Non-registered savings are also unrestricted. Most lenders want to see 90 days of account history ('seasoning') showing the funds have been yours, not a recent transfer masking a loan. |
|
FHSA (First Home Savings Account) |
Up to $40,000 lifetime ($8,000/yr) |
No repayment; tax-free withdrawal |
Launched April 2023. Best of RRSP + TFSA: contributions are tax-deductible AND withdrawals for a qualifying home are tax-free. Investment growth inside the account also comes out tax-free. Open an FHSA as early as possible — the contribution room only starts accumulating from account opening date, not from age 18. If you opened an FHSA in 2023 and contributed $8K/yr, you have $24K + growth by 2026. |
|
RRSP via Home Buyers' Plan (HBP) |
Up to $60,000/person ($120,000/couple) |
Must repay over 15 yrs (grace period 5 yrs for 2022–2025 withdrawals) |
Withdraw up to $60,000 per person from your RRSP, tax-free at time of withdrawal. Funds must have been in the RRSP for at least 90 days before withdrawal. Repayment starts in year 5 (for withdrawals Jan 2022–Dec 2025) and must be repaid over 15 years at 1/15th annually. If you miss a repayment, the missed amount is added to your taxable income that year. Can be combined with FHSA: together, $100,000 per person ($200,000 per couple). |
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Gift from a family member |
No maximum — but must be documented |
No repayment (must be confirmed in writing by giftor) |
CMHC and most major lenders accept gifts from immediate family members (parents, grandparents, siblings, spouse) as eligible down payment. Must be accompanied by a signed gift letter confirming: the amount, the relationship, and that no repayment is expected. Some lenders require 15–90 days of account history showing the gift is deposited and settled. Gifts from non-family are not accepted by most insured lenders. |
|
Proceeds from sale of another property |
No limit |
No repayment |
Straightforward — sale proceeds from a previous home, investment property, or other real estate. Must be documented with a statement of adjustments and evidence of deposit. |
|
TFSA withdrawals |
No limit on amount or use |
No repayment obligation |
TFSA withdrawals are always tax-free and can be used for any purpose including a down payment. Unlike RRSP/HBP, there are no first-time buyer conditions, no repayment requirements, and contribution room is restored January 1 of the following year. Highly flexible. |
|
Borrowed funds (loan, HELOC, credit card) |
Technically possible but complex |
Full repayment obligation — treated as debt in TDS/GDS calculation |
CMHC and Sagen do NOT allow borrowed down payments for insured mortgages. Canada Guaranty has some products that permit it. If you borrow the down payment, the lender must include the repayment in your debt ratios (TDS/GDS), which typically reduces your maximum mortgage. Borrowed down payments significantly increase risk — you're 100% leveraged with no equity cushion. |
|
Employer assistance / restricted stock / pension |
Varies |
Varies by program |
Some employers offer homeownership assistance programs. Restricted stock units (RSUs) or vested stock options may be liquidated for down payment. Pension withdrawals may be possible in some circumstances. All treated as personal savings once deposited — must show 90 days of history. |
The 90-Day Seasoning Rule — What It Means
Most lenders require 90 days of account history showing the down payment funds have been in your Canadian bank account. This 'seasoning' requirement prevents borrowers from taking out loans, transferring money in temporarily, and presenting it as savings. Exceptions exist for:
- RRSP/HBP withdrawals (not subject to the 90-day rule — they're directly from a registered account)
- FHSA withdrawals (same — directly from registered account)
- Sale proceeds from another property (documented by statement of adjustments)
- Gift funds (documented by gift letter and transfer evidence, though some lenders still want 15–30 days of deposit history)
Practical implication: If you are planning to wire funds from abroad or liquidate investments, do it at least 90 days before your anticipated closing date. If you need to pull money from a foreign account, that process can take 2–4 weeks just for the transfer — add the 90-day seasoning and you need to start 4–5 months before closing.
FHSA vs. RRSP Home Buyers' Plan vs. TFSA: Which Account for Your Down Payment?
These three accounts are the most commonly used savings vehicles for Canadian down payments. They are not mutually exclusive — the optimal strategy typically combines all three. Here's how they compare:
|
Feature |
🏠 FHSA |
📈 RRSP (HBP) |
💰 TFSA |
|
Annual contribution limit |
$8,000 (max $8,000 carryforward from prior yr) |
18% of prior year income up to annual RRSP limit (~$31,560 for 2025) |
$7,000 (2025 limit); unused room accumulates lifetime |
|
Lifetime contribution limit |
$40,000 |
No lifetime cap (tied to income/room) |
No lifetime cap |
|
Tax deduction on contribution |
✅ Yes — reduces taxable income now |
✅ Yes — reduces taxable income now |
❌ No — contributions from after-tax dollars |
|
Investment growth taxation |
Tax-free inside account |
Tax-deferred (taxed on withdrawal) |
Tax-free inside account |
|
Withdrawal — home purchase |
✅ Tax-free, no repayment |
⚠️ Tax-free at withdrawal but MUST repay over 15 yrs |
✅ Tax-free, no repayment (no conditions) |
|
First-time buyer condition |
✅ Required (haven't owned home in 4 yrs) |
✅ Required for HBP (same 4-yr rule) |
❌ No condition — any buyer can use TFSA |
|
Maximum for home purchase |
$40,000 + investment growth |
$60,000/person ($120,000/couple) |
No limit — entire TFSA balance usable |
|
Combined with other account? |
✅ Can combine FHSA + HBP for same purchase |
✅ Can combine with FHSA |
✅ Can combine with FHSA and HBP |
|
Account must be closed after purchase? |
Yes — within 1 year of qualifying withdrawal |
No — RRSP stays open (just repay HBP) |
No — TFSA stays open; room restored Jan 1 next year |
|
Best for... |
Maximum tax efficiency for first-time buyers with time to contribute |
Buyers with large RRSP balance and high current income |
Buyers who are not first-timers, or need flexibility, or want no repayment obligation |
The Optimal Strategy: FHSA First, Then HBP, Then TFSA
For most first-time buyers with 2–5 years until purchase, the recommended sequence is:
- Step 1 — Open and maximize your FHSA immediately. Contribute $8,000 per year (max $16,000 in year 2 if you carried forward $8,000). Invest in growth assets inside the FHSA. All contributions reduce your taxable income now. All growth and withdrawals are tax-free. This is categorically the most tax-efficient down payment savings vehicle in Canada.
- Step 2 — Contribute to RRSP for HBP if you have tax room. If you're in a higher tax bracket (30%+), RRSP contributions save significant tax now and the $60,000 HBP withdrawal is tax-free at time of home purchase. Remember: funds must be in RRSP for 90 days before HBP withdrawal.
- Step 3 — Use TFSA for additional savings above FHSA/RRSP. TFSA withdrawals are fully flexible — no conditions, no repayment, no first-time buyer requirement. If you have savings beyond your FHSA and RRSP HBP limits, TFSA is the next most efficient vehicle.
- Combine on purchase: At time of purchase, you can withdraw from FHSA + RRSP HBP for the same purchase. Maximum per person: $40,000 (FHSA) + $60,000 (HBP) = $100,000. Per couple: $200,000. On top of any existing TFSA savings.
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💡 Open Your FHSA on Day One — The Room Only Starts Accumulating When You Open the Account Unlike RRSP or TFSA contribution room, which builds based on your age and income from the time you turn 18, FHSA contribution room only starts accumulating from the date you open the account. A 30-year-old who opens an FHSA in January 2025 can contribute $8,000 immediately and another $8,000 in January 2026. A 30-year-old who waits until January 2027 to open the account has zero FHSA contribution room until then — regardless of their income or age. There is no retroactive room. Open the account now, even if you can only contribute $100 today. |
The FHSA + HBP Worked Example: A Couple Buying a $700,000 Calgary Townhouse
Partner A: Opened FHSA in 2023. Contributed $8,000 in 2023, $8,000 in 2024, $8,000 in 2025 = $24,000 in contributions + investment growth (~$28,000 with 8% return). RRSP balance: $55,000. HBP withdrawal: $55,000. Total down payment contribution: $83,000.
Partner B: Opened FHSA in 2024. Contributed $8,000 in 2024, $8,000 in 2025 = $16,000 + growth (~$17,500). TFSA balance: $22,000. Total: $39,500.
Combined: $83,000 + $39,500 = $122,500 available for down payment on $700,000 = 17.5% down. CMHC premium: 3.10% × $577,500 = $17,903. Monthly mortgage (5.25%, 25 years): ~$3,450/month. This is a realistic scenario for a dual-income newcomer couple with 3 years of savings in Canada.
Down Payment Reality by Canadian City: What the Percentages Mean in Dollars
Abstract percentages don't tell you much. Here is what the minimum and 20% down payment actually look like in each major Canadian townhouse market in 2025:
|
City / Region |
Avg Townhouse Price Range (2025) |
Min. Down (Insured) |
20% Down (Conventional) |
Buyer Context |
|
Metro Vancouver |
$1,150,000–$1,400,000 |
$100,000–$130,000 (insured min) |
$230,000–$280,000 |
Vancouver townhouses typically exceed $1M. Minimum insured down on $1.2M = $95,000. Most buyers in this range target 20% ($230K+) to avoid premium costs and access better rates. |
|
Burnaby / Coquitlam |
$900,000–$1,200,000 |
$65,000–$95,000 (insured min) |
$180,000–$240,000 |
Slightly more accessible than core Vancouver. Insured mortgages now available to $1.5M (post-Dec 2024) helps buyers in this range. |
|
Surrey / Langley / Abbotsford |
$650,000–$900,000 |
$40,000–$65,000 (insured min) |
$130,000–$180,000 |
Fraser Valley markets still insurable at minimum 5–10% depending on price. More accessible entry point for BC buyers. |
|
GTA / Toronto |
$900,000–$1,400,000 |
$65,000–$130,000 (insured min) |
$180,000–$280,000 |
Similar to Vancouver in price tier. Many GTA buyers targeting 20%+ to avoid large CMHC premiums on $1M+ mortgages. |
|
Mississauga / Brampton |
$700,000–$950,000 |
$45,000–$70,000 (insured min) |
$140,000–$190,000 |
More accessible suburban GTA. Insured mortgage feasible in this range without extreme down payment requirements. |
|
Ottawa |
$500,000–$750,000 |
$25,000–$45,000 (insured min) |
$100,000–$150,000 |
Ottawa is the most accessible major Canadian city for first-time buyers. Minimum down payment at $600K townhouse = $35,000. FHSA + HBP can cover this. |
|
Calgary |
$450,000–$700,000 |
$22,500–$45,000 (insured min) |
$90,000–$140,000 |
Best affordability among major Canadian cities. $25,000 down buys a $500K Calgary townhouse with CMHC insurance. FHSA alone ($40K + growth) can cover the minimum down in this market. |
|
Edmonton |
$350,000–$550,000 |
$17,500–$30,000 (insured min) |
$70,000–$110,000 |
Most affordable major Canadian market. FHSA ($40K) exceeds the minimum down payment for many Edmonton townhouses. |
The Ottawa and Calgary insight: In Ottawa and Calgary, a couple maximizing FHSA contributions for 3 years ($48,000 per person = $96,000 combined, before investment growth) can approach or exceed the 20% down payment threshold for the median townhouse in those markets — without touching RRSP/HBP at all. In Vancouver and Toronto, the math is harder. Even $200,000 combined from FHSA + HBP is a minimum or low down payment on a $1.2M property.
Newcomers to Canada: Down Payment Rules, Challenges & Strategies
For newcomers, the down payment question is complicated by factors that most Canadian guides don't address: foreign savings, no Canadian credit history, work permit status, and the mechanics of bringing money into Canada. Here is the complete picture:
|
Newcomer Scenario |
Down Payment and Mortgage Rules — What You Need to Know |
|
No Canadian credit history (< 2 years in Canada) |
Most CMHC-insured lenders require at least a 600 credit score from at least one borrower. With no Canadian credit history, major banks may require 35% down payment as a compensating factor. Alternative: Scotiabank's Nova Credit Passport allows some newcomers to use home-country credit. CMHC's Newcomer Program allows lenders to consider international credit references and shorter Canadian employment history in some cases. Start building credit on Day 1 of arrival. |
|
Permanent Resident (< 2 years in Canada) |
Eligible for CMHC-insured mortgages with standard minimum down payment (5–10%). May need to show: 90-day employment letter from Canadian employer, or alternative income documentation. Some lenders require 2 years of Canadian employment; others accept 1 year + strong international employment history. PR status is the key credential — most major banks will work with PRs. |
|
Temporary foreign worker / work permit holder |
CMHC insured mortgages technically available to temporary residents. Lenders more cautious: typically want 2+ years remaining on work permit, stable income, and often a larger down payment (10–20%). Some lenders treat TFW buyers similarly to PRs if income is well-documented. Confirm status requirements with your mortgage broker before applying. |
|
Down payment from abroad (international wire transfer) |
Allowed — but must be documented. Lender will require: bank statements from the originating foreign account showing the balance, wire transfer confirmation, explanation of the source of funds (savings, property sale, inheritance, gift). Funds must be converted to CAD and sitting in a Canadian account for 90 days to be considered 'seasoned' by most lenders. Anti-money laundering requirements mean unusual or large transfers will be scrutinized — start this process early. |
|
Gift from family still abroad |
Allowed under same gift rules as domestic gifts — signed gift letter, evidence of transfer, relationship documentation. Foreign gifts may face additional AML documentation requirements from the lender. Some lenders require statutory declarations from the giftor. Process is manageable but slower — build in 3–4 weeks. |
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Using FHSA as a newcomer |
FHSA requires: Canadian residency, age 18+, and first-time buyer status (not owned a principal residence in Canada in past 4 years). Most newcomers qualify. Open an FHSA immediately upon arrival — the $8,000/year contribution room accumulates from account opening date, not from residency date. A newcomer who arrives in January 2025 and opens an FHSA immediately can have $16,000+ available by the time they buy in 2027. |
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🚨 The 35% Down Payment Rule for Newcomers Without Canadian Credit Newcomers without an established Canadian credit history face a higher bar. Most A-lenders (major banks) will require 35% down payment — not the standard 5–10% — if neither borrower has a Canadian credit score. This is a significant difference: on a $700,000 Calgary townhouse, 5% down = $35,000 while 35% down = $245,000. The solution is to start building Canadian credit on Day 1 of arrival (see our How to Build Credit History in Canada guide) and hold off on purchasing until you have at least 12–18 months of Canadian credit history. Alternatively, Scotiabank's Nova Credit Passport allows some newcomers from eligible countries to use their home-country credit history for Canadian mortgage applications. |
How to Bring Down Payment Funds from Abroad
- Step 1 — Gather documentation in your home country before leaving: Bank statements for the past 12–24 months showing the source and accumulation of funds. If the source is a property sale, salary income, or inheritance — document it with official records now.
- Step 2 — Wire funds to your Canadian bank account at least 90 days before your anticipated closing date: Most Canadian banks accept international wire transfers. Use your bank's SWIFT/BIC code. The wire will be subject to AML (anti-money laundering) review for amounts above CAD $10,000. Be prepared to explain the source.
- Step 3 — Convert currency and confirm settled balance: After the wire clears, convert to CAD if not already. Get a confirmation of the settled balance from your bank. The 90-day clock starts from the date the funds clear in your Canadian account.
- Step 4 — Keep all documentation: Your mortgage lender will require: original wire transfer confirmation, foreign bank statements showing the source, a letter explaining the origin of funds, and 3 months of Canadian account statements showing the balance. Organize this paperwork early.
Total Cash You Need at Closing — Beyond Just the Down Payment
The down payment is the largest item — but not the only one. Here is a realistic total closing cost estimate for a townhouse purchase in Ontario and BC:
• Down payment: The amount you've calculated above (5–20% of purchase price).
• Land transfer tax (Ontario): 0.5–2.5% of purchase price on a sliding scale. Toronto has an additional municipal LTT on top of provincial. First-time buyer rebate: up to $8,475 provincial + $4,475 Toronto. Example: $700K Ontario purchase = ~$9,475 provincial LTT (first-time buyer after rebate: $1,000).
• Land transfer tax (BC): 1% on first $200K, 2% on $200K–$2M, 3% on $2M+. First-time buyer exemption: full exemption on first $500K fair market value; partial exemption $500K–$835K. Example: $700K BC purchase = ~$9,000 PTT (first-time buyer after exemption on first $500K: ~$4,000).
• CMHC insurance premium tax (ON/QC only): 8% PST on the CMHC premium, paid at closing in cash. Example: $700K purchase, 5% down, premium $26,600: Ontario tax = $2,128.
• Legal fees + disbursements: $1,500–$2,500 for a real estate lawyer in most provinces. Quebec requires a notary: $1,200–$2,000.
• Home inspection: $400–$600.
• Title insurance: ~$300–$400 (one-time, usually arranged through your lawyer).
• Moving costs + initial setup: Variable. Budget $2,000–$8,000 for a local move; more for cross-Canada.
• Deposit (part of down payment): In Ontario, typically 5% of purchase price due within 24–48 hours of offer acceptance — this is not a separate cost but must be in liquid accessible funds at time of offer.
Rule of thumb for total closing budget: Add 1.5–3% of purchase price to your down payment to cover all closing costs. On a $700,000 townhouse: $10,500–$21,000 in additional closing costs on top of the down payment.
Frequently Asked Questions: How Much Down Payment for a Townhouse
What is the minimum down payment for a $800,000 townhouse in Canada?
$55,000. Calculated as: 5% × $500,000 = $25,000, plus 10% × $300,000 = $30,000. Total: $55,000. CMHC premium on the resulting $745,000 mortgage: 3.10% = $23,095 added to the mortgage. This became achievable with less than 20% down as of December 2024 — previously, any purchase above $1M required 20% down, but the new $1.5M insured cap has made a wider range of properties insurable with smaller down payments.
Can I use my FHSA and RRSP Home Buyers' Plan together?
Yes — and you should. You can make both an FHSA qualifying withdrawal and an RRSP HBP withdrawal for the same home purchase, as long as you meet the conditions for each. Maximum combined: $40,000 (FHSA lifetime cap) + $60,000 (HBP limit) = $100,000 per person. As a couple where both partners qualify: $200,000. This is one of the most powerful down payment tools available to Canadian first-time buyers and is dramatically underused.
Can a newcomer use foreign savings as a down payment in Canada?
Yes — with documentation. Foreign savings are eligible as long as they can be documented (source, amount, accumulation history) and have been in a Canadian bank account for at least 90 days before closing. Wire transfers from abroad will be subject to AML review. Start the transfer process at least 4–5 months before your anticipated closing to allow time for the wire to clear and the seasoning period to complete.
Is 30-year amortization available for townhouses in Canada in 2025?
Yes — for first-time buyers. As of December 15, 2024, all first-time buyers with an insured mortgage (less than 20% down) can amortize over 30 years on both new and resale properties. This reduces your monthly payment by approximately 8–10% versus a 25-year amortization. Caution: the additional 5 years of amortization adds $60,000–$100,000 in interest over the life of a $600,000 mortgage. Use it for qualification purposes, but consider making prepayments if your budget allows.
Do CMHC insured mortgage rules apply differently to townhouses vs. condos vs. detached homes?
No — the down payment rules apply to the purchase price, not the property type. Whether you are buying a strata townhouse, a condo apartment, or a detached home, the same 5%–10% sliding scale applies for insured mortgages below $1.5 million. The only property-type-specific rule: CMHC insurance is not available for rental investment properties (the buyer must intend to occupy the home). If you are buying a townhouse as a pure rental investment, you need 20% down minimum — and conventional mortgage rules apply.
How much should I actually put down — minimum or more?
It depends on your market, your cash flow, and your timeline. The minimum gets you into ownership sooner but costs significantly more over time due to CMHC premiums and higher interest on a larger mortgage. In expensive markets where prices may continue rising, getting in earlier at 5–10% down may produce better total returns than waiting to save 20%. In stable or declining markets, a larger down payment reduces risk and monthly carrying costs. Most financial advisors recommend targeting at least 10% if possible — the premium reduction from 4% to 3.10% saves $3,000–$6,000 on a typical mortgage, and the lower balance meaningfully reduces interest. 20% eliminates the premium entirely and maximizes your equity position from day one.
Conclusion
Buying a townhouse in Canada in 2025 requires understanding three things: the rules (minimum down by price, insurance premiums, December 2024 changes), the sources (FHSA, RRSP/HBP, TFSA, gifts, savings), and the real numbers for your specific city and price point.
The single best action you can take today if you're 2–5 years from buying: open an FHSA immediately. Every month you wait is contribution room you'll never recover. Contribute the maximum $8,000 per year, invest it in growth assets, and combine it with your RRSP HBP withdrawal when you're ready to buy. As a couple, that's up to $200,000 in tax-advantaged down payment savings before TFSA and personal savings on top.
For newcomers: the system is navigable. Document your foreign savings early, transfer funds with enough lead time to satisfy the 90-day seasoning requirement, start building Canadian credit on Day 1, and talk to a mortgage broker who specializes in newcomer buyers. The path to a townhouse in Canada is longer for newcomers than for lifelong residents but it is a clear, documented, achievable path.
Start the process now, not when you find the property you want to buy.
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Figuring Out Your Down Payment for a Canadian Townhouse? NaviLiving helps newcomers and first-time buyers understand the full cost of townhouse ownership in Canada — from minimum down payment to closing costs, mortgage qualification, and the right market for your budget. |
