Buying your first home is one of the biggest financial milestones you’ll ever reach. It’s exciting, life-changing—and often stressful. In today’s housing market, where prices are at historic highs and interest rates remain elevated, many young adults are wondering if homeownership is even possible. The reality? Saving for a down payment today is more challenging than it was a decade ago, but with planning, discipline, and the right tools, becoming a homeowner in Canada remains within reach. At isure, we’ve put together this complete guide to help you understand down payments, the current housing landscape, and the best strategies to save for your first home.
What is a Down Payment?
A down payment is the upfront amount you contribute toward the purchase price of a home. The rest is financed through a mortgage. For example, if you buy a home for $600,000 and put down $40,000, your mortgage will cover the remaining $560,000.
In Canada, your down payment must be made in cash, cheque, or from verified savings—you can’t use a credit card. Lenders use your down payment to determine your mortgage size and whether you qualify for approval.
Minimum Down Payment Rules
The minimum down payment depends on the purchase price of the property:
- Homes under $500,000: 5% of the purchase price
- $500,000 – $999,999: 5% of the first $500,000 + 10% of the remaining amount
- $1,000,000 or more: 20% of the purchase price (no mortgage insurance available)
Note: If you’re self-employed or have a poor credit history, lenders may require more than the minimum.
The State of Homeownership in Canada
The Canadian housing landscape has continued to evolve rapidly in 2024 and into 2025, with affordability pressures, interest rate shifts, and changing behaviours among younger buyers reshaping homeownership trends.
- According to projections from IBISWorld, the national homeownership rate is expected to hover around 65.8% in 2025, up slightly from 65.7% in 2024.
- Homeownership growth is constrained by rising housing costs, stagnant wage growth, and higher household debt loads.
- Among young adults (ages 18–34), homeownership is under more strain: a 2025 Scotiabank-based poll reports only 26% of this demographic currently own a home—down from 47% in 2021.
- The same poll indicates 29% of young adults report continuing to live with parents or family, up by nine points relative to earlier years.
- On the price side, average home prices remain elevated. As of June 2025, the GTA average home price was around $1,120,879, reflecting a year-over-year drop of about 4%.
- Nationally, the average home price in mid-2025 was about $691,643, the highest since November 2024.
- In interest rate news, the average rate for new insured mortgages was about 4.63% in April 2025.
- Market forecasts suggest the Bank of Canada’s policy (overnight) rate may decline modestly for the remainder of 2025. It may possibly settle in the 2.00% – 3.00% range depending on inflation and economic conditions.
How Much is an Average Down Payment in Canada?
The amount of money you need to put down for a down payment will differ depending on the purchase price of your home. You may choose to put down more, but there are minimum requirements that must be met. The following is the minimum down payment requirement, depending on your home’s price:
- $500,000 or less: 5% of the purchase price
- $500,000 to $999,999: 5% of the first $500,000 of the purchase price, as well as 10% for the portion of the price above $500,000
- $1 million or more: 20% of the purchase price
Something to keep in mind is that if you are self-employed, a freelancer, or have a poor credit history, your lender may require a larger down payment. This confirms that you will be able to make the mortgage payments as needed.
5 Proven Ways to Save for Your First Down Payment
1. Automate Your Savings
Set up automatic transfers into a Tax-Free Savings Account (TFSA) or First Home Savings Account (FHSA) each payday. Even small amounts ($100–$200 per paycheque) grow significantly over time, especially when invested. Treat tax refunds, work bonuses, or GST credits as “found money” and put them directly into your home fund.
Additionally, when setting aside money, ensure it is in a location that isn’t easily accessible. By doing this, you avoid any hesitation about dipping into it on a night out or when that new pair of shoes tempts you to buy.
2. Cut Back on Non-Essentials
Audit your monthly expenses and cut what you don’t need:
- Cancel unused streaming services, subscriptions or gym memberships
- Cook at home instead of eating out or ordering in
- Make coffee at home (saves over $1,200/year on average)
It can be a tough adjustment at first, but websites and applications like You Need A Budget or Mint can help you figure out what you can (and can’t) live without.
3. Use the Bank of Mom and Dad (If Possible)
We understand that asking for help from your parents can sometimes be a difficult decision. However, if you are fortunate enough to have family that can help with a down payment, you should consider it. It’s no secret that this is the route that many people tend to take. In fact, about one-third of homeowners in Canada have received help from their parents when it comes to making that down payment.
This does not only include first-time home owners, either. About 10% of people purchasing their second home also turn to their parents for assistance. Let’s face it, with rising property prices, making a down payment on one’s own can be challenging. If you are unable to save money due to your living situation, this option may be suitable for you. You can also have peace of mind knowing you can pay it back little by little, with no interest (if you’re lucky!)
4. Pay Off High-Interest Debt First
It’s almost impossible to save while paying high interest on credit cards or personal loans. Tackle debt aggressively before focusing on your down payment. Not only will this free up cash flow, but it also improves your chances of mortgage approval.
Besides, being a first-time homeowner will cost a lot of money due to repairs that may be needed, so it’s best to go into this chapter of your life debt-free.
5. Take Advantage of Government Programs
Several programs exist to help Canadians become homeowners:
- First Home Savings Account (FHSA): Launched in 2023, allows first-time buyers to save up to $40,000 tax-free. Contributions are tax-deductible (like an RRSP), and withdrawals for a qualifying home purchase are tax-free (like a TFSA).
- Home Buyers’ Plan (HBP): Withdraw up to $35,000 from your RRSP to put toward your down payment (must be repaid over 15 years).
- First-Time Home Buyer Incentive (FTHBI): The federal government provides 5–10% of the home’s purchase price as a shared-equity mortgage.
- Land Transfer Tax Rebates: Ontario first-time buyers may qualify for rebates of up to $4,000.
Final Thoughts: Saving for a Down Payment
Yes—the dream of homeownership is still alive in Canada, but it takes strategy, patience, and discipline. By automating your savings, reducing expenses, paying down debt, and leveraging government programs, you can bring your first home within reach—even in a challenging market.
And when you finally purchase your dream home, don’t forget the next step: protecting it with the right home insurance policy. At isure, we’ll help you find the best coverage at the most competitive rates.
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