Can You Buy a House Without a Down Payment?

Generally, you cannot buy a house in Canada with no down payment at all.

Most buyers need at least 5% down. However, the money does not always have to come entirely from your savings. Some buyers can use a financial gift or certain borrowed funds to cover the down payment.

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What Is the Minimum Down Payment in Canada?

The minimum depends on the purchase price of the home.

For a home costing $500,000 or less, you need at least 5% down.

For a home between $500,000 and $1.5 million, you need 5% on the first $500,000. You then need 10% on the portion above $500,000.

For a home costing $1.5 million or more, you need at least 20% down.

For example:

• $400,000 home: minimum $20,000 down

• $750,000 home: minimum $50,000 down

• $1 million home: minimum $75,000 down

If you put less than 20% down, you will typically need mortgage loan insurance.

Can You Borrow Your Down Payment?

In some cases, yes.

CMHC allows certain qualified borrowers to use non-traditional sources for a down payment. This can include an unsecured personal loan or an unsecured line of credit.

There are additional requirements. This option is generally available for qualifying one- or two-unit properties with a mortgage between 90.01% and 95% of the home's value. Borrowers also need a strong credit management history.

Borrowing your down payment also adds debt. This can affect how much mortgage you qualify for.

Can Someone Gift You the Down Payment?

Yes.

A non-repayable financial gift from a relative can be an acceptable source of down payment funds.

Your lender may ask for documentation showing that the money is truly a gift. They may also want confirmation that you are not expected to repay it.

Can You Use an FHSA for Your Down Payment?

Yes.

The First Home Savings Account (FHSA) is designed to help eligible first time homebuyers save for a home.

You can contribute up to $8,000 when you first open an FHSA. The lifetime contribution limit is $40,000. Eligible contributions can also provide a tax deduction. Qualifying withdrawals to purchase a first home are tax-free.

Can You Use Your RRSP for a Down Payment?

Eligible first-time buyers can use the Home Buyers' Plan (HBP).

The HBP allows you to withdraw up to $60,000 from your RRSP toward a qualifying home.

You can also use the HBP and an FHSA for the same home if you meet the eligibility requirements for both programs.

Do You Need More Than the Down Payment?

Yes.

Your down payment is not the only upfront cost of buying a home.

You may also need money for:

• Legal fees

• Land transfer tax

• Home inspection

• Moving expenses

• Property tax adjustments

• Other closing costs

CMHC estimates that closing costs can equal around 1.5% to 4% of the home's purchase price.

So, Can You Buy a House With Zero Savings?

Potentially, but that is different from buying a house with zero down.

Canada still requires a minimum down payment. Some qualified buyers may be able to cover it using a gift or approved borrowed funds instead of their own savings.

That does not necessarily make it the best option. Starting homeownership with additional debt can put more pressure on your monthly budget.

If possible, saving toward your down payment and closing costs can give you more flexibility when it is time to buy.