How Much Down Payment Do You Need to Buy a House in Canada If You Already Own One?
One of the most common questions I get as a mortgage broker is: “How much down payment do I need if I already own a home but want to buy another one?”
Many people believe that the 5% down payment rule is only for first-time homebuyers, but that’s not true! In Canada, you can put as little as 5% down on a new home even if you already own other properties—as long as certain conditions are met.
The 5% Down Payment Rule Explained
If you’re planning to buy another property that you’ll live in as your primary residence, use as a vacation home, or provide as a home for a family member, then you qualify for the 5% down payment option. It doesn’t matter if you already own one or even five other properties—as long as this new purchase is for an owner-occupied property, the 5% rule applies.
Here’s the breakdown:
- You can put 5% of the purchase price as a down payment.
- This applies whether you’re upgrading, downsizing, buying a second home, or purchasing a house for a family member.
- You can certainly choose to put down more than 5% if you want, but you’re not required to.
The Role of Mortgage Insurance
When you put less than 20% down, the mortgage must be insured by one of Canada’s three major mortgage insurance providers:
- CMHC (Canada Mortgage and Housing Corporation)
- Sagen
- Canada Guaranty (CG)
This insurance protects the lender if you default on the loan. An insurance premium will be added to your mortgage amount, which varies depending on the percentage of your down payment.
Clearing Up a Common Misconception
There’s a widespread belief that 5% down payments are only for first-time homebuyers. That’s not true. While first-time buyers frequently take advantage of this option, it’s available to anyone purchasing an owner-occupied property, no matter how many other homes they own.
The key detail is that the new property must be owner-occupied—meaning you or a family member will live in it. If you’re buying an investment property to rent out, different rules and down payment requirements apply.
The Bottom Line
If you already own a home and are considering buying another property to live in (or for a family member), you can still qualify for a 5% down payment. This flexibility is great news for homeowners looking to make a change without needing to save for a massive down payment.
If you’re thinking about buying another home or just curious about your mortgage options, feel free to reach out. I’m here to help you navigate the process and find the best mortgage solution for your needs!
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