What does a down payment mean when buying a home?

🏠 Definition:
The down payment is a portion of the home’s total purchase price that you pay out of pocket. The rest is covered by your mortgage loan.

💰 Example:
If you buy a home for $500,000 and make a 10% down payment, you’ll pay $50,000 upfront, and your mortgage will cover the remaining $450,000.

📊 Why it matters:

• The size of your down payment affects your monthly mortgage payment — the larger your down payment, the less you owe.

• In Canada, the minimum down payment depends on the price of the home:

  • 5% for homes up to $500,000

  • 10% on the portion from $500,000 to $999,999

  • 20% for homes $1,000,000+

• If you put less than 20% down, you’ll need mortgage loan insurance (through CMHC, Sagen, or Canada Guaranty).

✨ In short:
Your down payment = your investment in the home — it builds your equity from day one and shows lenders you’re financially committed to the purchase.