First Home Readiness: the cash you actually need
The down payment is the number everyone saves for. The closing bill is the number that surprises them, three weeks out, when the offer is already firm.
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The short answer
Two things have to be true. You need the cash: the minimum down payment is 5% of the first $500,000 and 10% of the rest, plus an all-in closing bill that includes land transfer tax. You also need the approval: a lender tests your payment at your rate plus two per cent, not the rate you sign.
The home
Your money
The mortgage
A worked $650,000 Ontario example
The calculator opens on a first-time buyer with $40,000 saved and the same $40,000 planned for the down payment. Household income is $120,000, other debt payments are $400 a month, and the quoted mortgage rate is 4.50%.
| Part of the calculation | How it is treated | Amount |
|---|---|---|
| Minimum down payment | 5% of the first $500,000 plus 10% of the remaining $150,000 | $40,000 |
| Land transfer tax | Ontario tax of $9,475 less the $4,000 first-time buyer rebate | $5,475 |
| All-in closing costs | CMHC's 1.5% to 4% range, including land transfer tax | $9,750–$26,000 |
| Cash needed to close | Planned down payment plus the all-in closing-cost range | $49,750–$66,000 |
| Mortgage loan insurance | 4% of the $610,000 base loan, added to the mortgage | $24,400 |
| Tax on the insurance premium | Ontario RST at 8%, paid in cash within the all-in closing range | $1,952 |
| Stress-test rate | The quoted 4.50% rate plus 2% | 6.50% |
| Cash gap against $40,000 saved | $9,750–$26,000 | |
The three things that catch people out
The middle tier is not 10%
Above $500,000 the minimum is 5% of the first $500,000 plus 10% of the rest. On a $650,000 home that is $40,000, not $65,000. Getting this wrong in the pessimistic direction costs people a year of saving they did not need to do.
The premium is financed
Mortgage loan insurance is added to the mortgage, not paid at closing. What is paid in cash is the provincial sales tax charged on that premium in Ontario, Quebec and Saskatchewan, which cannot be added to the loan.
You are tested at a rate you will not pay
A lender qualifies you at the greater of your rate plus two per cent, or 5.25%. At 2026 rates that is almost always your rate plus two. This tool compares the result with the 39% and 44% ratios; it is an estimate, not an approval.
How the calculation works
Minimum down payment
5% of the first $500,000, 10% of the portion to $1.5 million, and 20% at $1.5 million and over, where mortgage loan insurance is no longer available at all.
Mortgage loan insurance
Required below 20% down. The premium runs from 0.60% to 4.00% of the loan depending on loan-to-value, plus 0.20% if the amortisation passes 25 years. A 30-year insured amortisation is available to first-time buyers and buyers of newly built homes. The premium is added to the mortgage rather than paid at closing.
The stress test
The payment is recalculated at the greater of your rate plus 2% or 5.25%, on a semi-annually compounded schedule as Canadian fixed mortgages are written. Using the monthly formula instead would overstate the payment by roughly $15 a month on a $500,000 mortgage.
The ratios
Principal, interest, property tax, heat and half of any condo fee must stay under 39% of gross income. Everything including other debt payments must stay under 44%. Whichever binds first is the one that decides your answer.
Land transfer tax
Marginal bands by province, so each rate applies only to the slice of price inside it, plus the second tax if the home is in Toronto, less any first-time buyer rebate. A rebate is never larger than the tax owed.
Cash to close
Down payment, plus the tax, plus an estimate for legal fees, title and adjustments. CMHC puts total closing costs at 1.5% to 4% of price and that range already contains the land transfer tax, so the tax is shown precisely and the remainder of the range becomes the estimate. Adding both whole would count the tax twice.
Where a figure is a rule it comes from the government page that sets it, dated in rates.js. Where it is an estimate, such as legal fees, it is shown as a range and labelled. Seven provinces and territories are not yet covered for land transfer tax; the tool says so rather than showing zero.
Government sources behind the calculator
Rules and rates were checked on August 19, 2026. Provincial tax coverage is deliberately incomplete where a government source could not be verified.
- Financial Consumer Agency of Canada: minimum down payment
- CMHC: mortgage loan insurance premiums
- OSFI: minimum qualifying rate
- CMHC: GDS and TDS ratios
- CMHC: insurable purchase cap and closing-cost range
- Department of Finance: 30-year insured amortisation eligibility
- Provincial tax on mortgage-insurance premiums: Ontario retail sales tax, Quebec tax on insurance premiums, and Saskatchewan PST on insurance contracts.
- Ontario land transfer tax and Toronto municipal land transfer tax
- British Columbia property transfer tax, Quebec transfer duties, Manitoba land transfer tax, New Brunswick real property transfer tax, and Alberta registration fees
Questions people ask
What is the minimum down payment on a house in Canada?
Five per cent of the first $500,000 of the purchase price, ten per cent of the portion between $500,000 and $1.5 million, and twenty per cent once the price reaches $1.5 million. On a $650,000 home the minimum is $40,000, not $65,000.
Is the CMHC premium paid in cash at closing?
No. The premium is normally added to the mortgage and paid off over the amortisation. The provincial tax charged on that premium in Ontario, Quebec and Saskatchewan is payable in cash; this tool counts it within the all-in closing-cost range.
What rate is the mortgage stress test applied at?
The greater of your contract rate plus two per cent, or 5.25 per cent. At the rates available in 2026 the contract rate plus two is almost always the higher, so the 5.25 per cent floor rarely binds. It applies to new mortgages, not to a straight switch to a new lender at renewal.
How much cash do I need beyond the down payment?
CMHC puts total closing costs at 1.5 to 4 per cent of the purchase price, which includes land transfer tax, legal fees, title insurance and adjustments. On a $650,000 home that is roughly $9,750 to $26,000 on top of the down payment.
Can I use my FHSA and RRSP for the down payment?
Yes. An FHSA is deductible going in and tax free coming out for a qualifying first home, and the Home Buyers' Plan lets you withdraw from an RRSP and repay it over fifteen years. Both count as your own funds. Whether the amount is enough is what this tool answers.
Why does my province show no land transfer tax?
Either it genuinely charges none, as Alberta does, or it has not been verified against a government source yet and is deliberately left out. The tool tells you which. Nothing here is estimated from an aggregator or another calculator.
Where to go next
Monthly Budget Calculator
If the gap is cash rather than approval, the question is what your month actually looks like.
Open the tool →Debt Payoff Calculator
Each dollar of other monthly debt uses one dollar of room inside the total debt ratio.
Open the tool →FHSA explained
The only account that is deductible going in and tax free coming out, if the home qualifies.
Read the guide →FHSA or the Home Buyers' Plan?
The free comparison shows how each one works, when repayment starts, and why qualifying buyers may use both for the same home.