This article is for general informational purposes only. Down payment rules, lender requirements, tax rules, and program eligibility vary by situation and lender. This is not financial, tax, or mortgage advice. Confirm your specific down payment sources, documentation requirements, and tax implications with a licensed mortgage professional and a qualified accountant before making any decisions.
A lot of first-time buyers come into their first conversation with a very specific picture in their head. The down payment is the number in the savings account. Maybe an FHSA they have been contributing to. Possibly an RRSP. That is it.
The down payment conversation is usually more interesting than that. There are several accepted sources, each with its own rules and documentation requirements. The buyers who understand all of them are in a better position to plan, and to move when the right property comes along.
One question I hear more often than you might expect: my money is not sitting in a bank account. It is invested. Can I still use it?
The answer is yes, with conditions worth understanding before you plan around any number.
Who this is for: Brampton and Mississauga first-time buyers who are in the planning stage and want to understand what sources their down payment can come from, how the documentation works, and what to watch out for if their savings are spread across different accounts or invested in the market.
TL;DR
Down payments in Canada can come from several accepted sources: personal savings (including investment accounts), FHSA withdrawals, RRSP Home Buyers Plan, and non-repayable gifts from immediate family. Each source has documentation requirements, and most require 90 days of account history. If your down payment is in stocks or a non-registered investment account, lenders need to see account history, the investments must be liquidated before or at closing, and capital gains tax may apply on any gain when you sell. Having enough for the down payment is only part of qualifying: CMHC also requires your monthly housing costs to stay at or below 39% of gross household income (GDS) and total debt at or below 44% (TDS). Closing costs add a further 1.5% to 4% of the purchase price on top. Confirm your full picture with a mortgage broker and accountant before planning around any number.
The Minimum Down Payment Numbers in Ontario
Before looking at where the money can come from, it helps to know how much is required. According to CMHC, the minimum down payment for a purchase price of $500,000 or less is 5%. When the purchase price is above $500,000, the minimum is 5% for the first $500,000 and 10% for the remaining portion. This sliding scale applies up to the insured mortgage cap of $1.5 million. Properties above $1.5 million are not eligible for CMHC insurance.
| Purchase Price | Minimum Down Payment | Notes |
|---|---|---|
| $500,000 or less | 5% | Minimum for insured mortgage |
| Above $500,000 to $1,499,999 | 5% on first $500K, 10% on the remainder | Insured mortgage available. Cap raised to $1.5M in December 2024. |
| $1,500,000 and above | Not eligible for CMHC insurance | Uninsured mortgage required. Minimum 20% typically required by lenders. |
A purchase with less than 20% down requires CMHC mortgage default insurance, added as a premium to the mortgage amount. The premium protects the lender, not the buyer. Knowing it exists matters when calculating the real monthly payment.
Source: CMHC, General Requirements to Qualify for Homeowner Mortgage Loan Insurance.
The Two Numbers That Determine Whether You Qualify
Down payment is only one part of qualifying for a CMHC-insured mortgage. CMHC also looks at two debt ratios that determine how much mortgage you can carry.
The first is the Gross Debt Service ratio (GDS). Your total monthly housing costs, which include principal, interest, property taxes, heating, and 50% of applicable condo fees, should not exceed 39% of your gross household income.
The second is the Total Debt Service ratio (TDS). Your total debt load, which includes your housing costs plus payments on all other debt, should not exceed 44% of your gross household income.
A buyer can have a sufficient down payment and still not qualify for the mortgage they planned on if the monthly payment pushes the GDS or TDS over those thresholds. Running the ratios before you set a price range is more useful than running them after you have fallen in love with a property.
Closing costs are separate from your down payment
CMHC notes that closing costs, which include legal fees, land transfer tax, and other adjustments, typically add 1.5% to 4% of the purchase price on top of the down payment. Many first-time buyers are surprised by these costs because they plan around the down payment number and do not account for the additional cash needed at closing.
For a full breakdown of what first-time buyers in Ontario actually owe at closing, see: Closing Costs in Ontario: What First-Time Buyers Actually Owe.
Where Your Down Payment Can Come From
CMHC, which insures most low-down-payment mortgages in Canada, recognizes two categories of down payment: Traditional and Non-traditional.
Traditional down payments come from your own resources: personal savings, proceeds from the sale of another property, or a non-repayable financial gift from an immediate family member. This is the category that applies to most first-time buyers.
Non-traditional down payments, such as borrowed funds from unsecured loans or lines of credit, are available under limited conditions for borrowers with strong credit profiles. Most first-time buyers will not be in this category.
Within the traditional category, the most common sources for first-time buyers are:
- Personal savings in a chequing or savings account, TFSA, GIC, or non-registered investment account including stocks. Lenders typically require 90 days of account statements for each source.
- FHSA (First Home Savings Account): contributions are tax-deductible and qualifying withdrawals for a first home purchase are tax-free. Annual contribution limit is $8,000, lifetime maximum is $40,000. CRA does not require contributions or transfers to stay in the FHSA for a minimum number of days before a qualifying withdrawal, but you must meet all qualifying withdrawal conditions and complete Form RC725.
- RRSP Home Buyers Plan: first-time buyers can withdraw up to $60,000 per person tax-free. The funds must have been in the RRSP for at least 90 days before withdrawal. Repayment over 15 years is required beginning the second year after withdrawal.
- Non-repayable gift from an immediate family member: a signed gift letter confirming the funds are not a loan, plus proof of the transfer deposited into the buyer’s account. Specific requirements vary by lender.
Program eligibility note
Both the FHSA and the RRSP HBP have first-time buyer conditions. If you or your spouse or common-law partner has owned a qualifying home as a primary residence in the current or previous four calendar years, you may not qualify for one or both programs. Confirm your eligibility with your mortgage broker before counting on either source.
What the 90-Day Paper Trail Actually Means
Almost every down payment source requires the same documentation standard: 90 days of account statements showing where the funds came from and how they moved.
This does not mean all of the money has to have been in one account for the full 90 days. It means lenders need to see the history. Any large deposit or transfer within the 90-day window needs to be explained.
If your down payment is spread across several accounts and you have been moving funds around recently, your mortgage broker will want to know. The cleanest path is to leave funds where they are, keep records of any transfers, and let the 90-day history speak for itself.
When Your Down Payment Is in Stocks or an Investment Account
A non-registered investment account holding stocks or other investments is an accepted traditional down payment source under CMHC’s framework. Your lender will require 90 days of account statements and the investments must be liquidated before or at closing.
But there are two things most buyers who hold their down payment in the market do not plan for, and both affect the actual number available at the closing table.
Capital gains tax reduces the net amount
When you sell investments held in a non-registered account, any gain above your original cost is a capital gain. Capital gains are taxable in Canada in the year the investment is sold. The amount you owe depends on your marginal tax rate and the size of the gain.
This means the balance you see in your investment account today is not necessarily the amount available for the down payment after tax. If the positions have appreciated since you bought them, the difference between the account balance and the after-tax proceeds can be meaningful.
Your accountant can give you a precise estimate before you plan your down payment around the current portfolio value.
Market timing risk is real
A stock portfolio can move against you between the day you make an offer and the day you close. If your down payment is entirely or mostly in stocks and the market drops in that window, the shortfall becomes yours to cover.
Most buyers who use investment accounts hold the positions until they have a firm accepted offer and a confirmed closing date, then sell and transfer the proceeds. Your mortgage broker can help you think through the timing before your offer goes in.
A pattern I see with buyers who have been investing for a few years is that their down payment has been working in the market rather than sitting in a savings account. They often wonder if this creates a problem when it comes time to buy.
One situation I worked through recently: the buyers had their deposit money ready in cash and the rest of their down payment held in stable, well-known stocks. They had held the positions for a couple of years. When we spoke to the mortgage specialist, the feedback was straightforward: as long as there is a paper trail showing the account history, this is workable. The lender will need the funds liquidated before closing.
The number to confirm before planning around that portfolio balance is the after-tax proceeds. If those positions have gained over two years, the net after capital gains tax may be less than the current account balance. That calculation is worth making with your accountant before your offer goes in.
The FHSA and the RRSP HBP: The Two Programs Built for First-Time Buyers
These two programs are the most structured down payment sources available to first-time buyers, and they are often used together on the same purchase.
The FHSA gives you tax-free growth and tax-free withdrawal for a qualifying home purchase, with contributions that are also tax-deductible. You can contribute up to $8,000 per year to a lifetime maximum of $40,000. CRA does not require a minimum holding period before a qualifying withdrawal, but you must meet all qualifying withdrawal conditions and complete the required CRA form. Source: CRA, Withdrawals and transfers out of your FHSAs.
The RRSP HBP lets you withdraw up to $60,000 per person from your RRSP for a qualifying first home purchase, tax-free at the time of withdrawal, with a 15-year repayment schedule. The funds must have been in the RRSP for at least 90 days before withdrawal. Both programs can be used on the same purchase if you qualify for both.
Already covered on the Shah Team blog
For a full explanation of how the FHSA works and whether it makes sense for your situation: [INTERNAL LINK TO FHSA ARTICLE — CONFIRM LIVE URL BEFORE PUBLISHING].
For a comparison of the FHSA and the RRSP HBP: [INTERNAL LINK TO FHSA vs RRSP HBP ARTICLE — CONFIRM LIVE URL BEFORE PUBLISHING].
Gifted Funds from Family: What Lenders Require
A non-repayable gift from an immediate family member is one of the three traditional down payment sources CMHC recognizes. Most lenders accept gifted funds with a signed gift letter confirming the money is a gift and not a loan, plus proof the funds were deposited into the buyer’s account.
Who qualifies as an immediate family member varies slightly by lender. Parents, siblings, and grandparents are typically included. Gifts from more distant relatives, friends, or employers are generally not permitted, or require additional documentation.
Timing matters. Some lenders want gifted funds to have been in the buyer’s account for a period before closing. If the gift is coming in close to your offer date, talk to your mortgage broker first so the timeline is planned properly.
Putting the Sources Together
Most first-time buyers draw from more than one source. A common combination is FHSA savings built over two or three years, topped up by RRSP HBP funds, with any remaining gap covered by personal savings.
Buyers who hold part of their down payment in investment accounts can blend those proceeds with program withdrawals in the same closing, as long as each source is properly documented and the total amount is verified by the lender before closing.
The mistake to avoid is planning around a headline number without confirming what each source nets after taxes, repayment obligations, and documentation requirements. The number in your head and the number that arrives at your lawyer’s office on closing day should be the same number.
Want to Know What Your Down Payment Picture Actually Looks Like?
If your savings are spread across different places and you are not sure how they all add up for a mortgage, that conversation is worth having before you start touring.
Call Gaurang at 647-892-2411.
Key Takeaways
- Down payments in Canada fall into two CMHC categories: traditional (own savings including investment accounts, sale of property, non-repayable family gift) and non-traditional (borrowed funds, limited conditions).
- Most accepted sources require 90 days of account statements showing where the funds came from.
- Investment accounts holding stocks are an accepted traditional source, but the investments must be liquidated before or at closing, and capital gains tax may apply on the gain when you sell.
- The minimum down payment is 5% up to $500,000 and 5% on the first $500K plus 10% on the remainder above that, up to the $1.5 million insured mortgage cap. Above $1.5 million, CMHC insurance is not available.
- CRA does not require FHSA contributions or transfers to stay in the account for a minimum number of days before a qualifying withdrawal. You do need to meet all qualifying withdrawal conditions and complete Form RC725.
- The RRSP HBP allows up to $60,000 per person. The funds must have been in the RRSP for at least 90 days before withdrawal. Repayment over 15 years is required.
- CMHC requires your GDS ratio (monthly housing costs) to stay at or below 39% of gross income and your TDS ratio (total debt) at or below 44%. Run these numbers before you set your price range.
- Closing costs add 1.5% to 4% of the purchase price on top of the down payment. Plan for both before you make an offer.
- Plan around the net number, not the headline number. Taxes, repayment obligations, and documentation requirements all affect what actually arrives on closing day.
Bottom Line
The down payment conversation starts with how much. But the more useful question is where the money is, what it will actually net after tax, and whether the documentation is ready before you make an offer.
Know your real number before you tour.
Frequently Asked Questions
Can I use stocks or an investment account as my down payment?
Yes. A non-registered investment account holding stocks or other investments is an accepted traditional down payment source under CMHC’s framework. Lenders require 90 days of account statements and the investments must be liquidated before or at closing. If the investments are in a non-registered account and have appreciated in value, capital gains tax applies on the gain when you sell. Confirm the net after-tax amount with your accountant before building your down payment plan around the current portfolio balance.
What is the minimum down payment in Ontario in 2026?
The minimum is 5% for a purchase price of $500,000 or less, and 5% on the first $500,000 plus 10% on the remaining portion for purchases above $500,000. This sliding scale applies up to the CMHC insured mortgage cap of $1.5 million, which was raised from $1 million effective December 15, 2024. Properties at $1.5 million and above are not eligible for CMHC insurance. Source: CMHC.
What is the 90-day rule for down payments?
Lenders require 90 days of account statements for most down payment sources to verify where the funds came from. Any large deposit or transfer within the 90-day window needs to be explained. The funds do not all need to have been in one account for the full 90 days, but the history of where they came from must be traceable.
Can I combine FHSA and RRSP HBP on the same purchase?
Yes, if you qualify for both. CRA confirms that you can withdraw from your RRSP under the Home Buyers Plan and make a qualifying withdrawal from your FHSA for the same qualifying home, as long as you meet all conditions at the time of each withdrawal. Both programs have first-time buyer eligibility conditions. Confirm eligibility with your mortgage broker before counting on either source.
Does the FHSA need to be open for a minimum period before I can withdraw?
No. According to CRA, there is no minimum number of days that contributions or transfers to your FHSA must stay in the account before you can use them for a qualifying withdrawal. You do need to meet all qualifying withdrawal conditions, including being a first-time buyer for withdrawal purposes, having a written purchase agreement with acquisition date before October 1 of the following year, being a Canadian resident, and completing Form RC725. Source: CRA, Withdrawals and transfers out of your FHSAs.
Can my down payment be a gift from my parents?
Yes. A non-repayable gift from an immediate family member is one of the three traditional down payment sources CMHC recognizes. A signed gift letter confirming the funds are a true gift and not a loan is required, along with proof of the transfer. Specific eligibility and documentation requirements vary by lender. Confirm with your mortgage broker.
What are the GDS and TDS ratios and why do they matter?
The Gross Debt Service ratio (GDS) and Total Debt Service ratio (TDS) are the two qualifying ratios CMHC uses alongside the down payment. GDS is your total monthly housing costs divided by your gross household income, and CMHC requires it to stay at or below 39%. TDS is your total debt load, including housing costs plus all other debt payments, divided by gross income, and CMHC requires it to stay at or below 44%. A buyer can have a sufficient down payment and still not qualify for the mortgage they planned on if the monthly carrying costs push either ratio over the threshold. Running these numbers before you set your price range is the more useful exercise.
Ready to Map Out Your Down Payment Before You Start Touring?
If you are a Brampton or Mississauga first-time buyer still working out your numbers, the most useful conversation you can have right now is about your actual down payment sources and what each one will net after tax and documentation.
Call Gaurang at 647-892-2411 to work through the real number before you make any decisions.
Gaurang Shah | Shah Team | Royal LePage Flower City Realty
647-892-2411 | mail@myshahteam.com | myshahteam.com
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References
- CMHC, General Requirements to Qualify for Homeowner Mortgage Loan Insurance: cmhc-schl.gc.ca
- CRA, Withdrawals and transfers out of your FHSAs: canada.ca
- CRA, First Home Savings Account (FHSA): canada.ca
- CRA, Home Buyers Plan (HBP): canada.ca
- Finance Canada, HBP Increase to $60,000 (April 2024): canada.ca
- Finance Canada, December 2024 Mortgage Rule Changes: canada.ca
