How the affordability calculator works
The live tool stays on the affordability calculator. This page is the down-payment bands, worked example, and insurance tables.
The tiered down payment minimum
Canada does not have a single minimum down payment. It has three bands, and they stack, so the effective percentage climbs as the price does. The 20% floor above $1,500,000 is absolute: no insurer will cover a purchase over that price, so no lender will accept less.
| Purchase price | Minimum down payment | Effective percentage |
|---|---|---|
| $400,000 | $20,000 | 5.00% |
| $650,000 | $40,000 | 6.15% |
| $900,000 | $65,000 | 7.22% |
| $1,200,000 | $95,000 | 7.92% |
| $1,600,000 | $320,000 | 20.00% |
Worked example: $140,000 household income
A couple earns $140,000 between them, carries $600 a month in car and credit payments, has $120,000 saved, and is quoted 4.29% on a 25-year amortization. Property tax is estimated at 1% of price and heating at $150 a month. The lender qualifies the file at 6.29% — the contract rate plus two points.
Loan-to-value lands at 82.5%, so the mortgage is insured and a premium of $15,804 is added to it. The debt-service ratios finish at 38.9% and 44.0% — meaning the second one is binding. This borrower is not limited by income in the abstract; they are limited by $600 a month of consumer debt.
What actually moves the number
Holding everything else at the worked example above, here is what each input is worth in purchasing power. The pattern is worth internalising before you start shopping: consumer debt and interest rates move the answer far more than most buyers expect, and savings move it far less.
| Change | Maximum price | Effect |
|---|---|---|
| No other monthly debts | $686,626 | +$2,197 |
| $900 a month of debts | $644,897 | −$39,532 |
| $1,200 a month of debts | $605,365 | −$79,064 |
| Rate at 3.79% instead of 4.29% | $708,146 | +$23,717 |
| Rate at 5.29% instead of 4.29% | $641,175 | −$43,254 |
| 30-year amortization | $720,276 | +$35,847 |
The first three rows show a threshold effect that surprises people. The gap between the two debt-service limits is five percentage points of gross income, which on a $140,000 household is roughly $583 a month. Up to that figure, other debts cost you almost nothing — the housing-only ratio is still the binding one. Past it, every additional dollar of monthly obligation removes about $132 of purchase price. Paying off a $400 car loan can be worth $50,000 of house.
Savings behave differently. Because the mortgage itself is capped by income, additional down payment converts to purchase price roughly one for one rather than being leveraged: at $60,000 down this borrower qualifies for a $565,146 mortgage, and at $200,000 down they qualify for $569,452. The reason to save more is not a bigger mortgage — it is crossing the 20% line and eliminating the insurance premium.
Default insurance premiums
Below 20% down, the mortgage must be insured by CMHC, Sagen or Canada Guaranty. The premium is a percentage of the mortgage, normally added to the loan and amortized with it. The provincial sales tax on the premium cannot be added — it is due in cash at closing, which catches Ontario, Quebec and Saskatchewan buyers off guard.
| Down payment | Loan-to-value | Premium | On a $500,000 mortgage |
|---|---|---|---|
| 5% – 9.99% | 90.01% – 95% | 4.00% | $20,000 |
| 10% – 14.99% | 85.01% – 90% | 3.10% | $15,500 |
| 15% – 19.99% | 80.01% – 85% | 2.80% | $14,000 |
| 20% or more | 80% or less | None | $0 |