Buying your first home in Canada can feel like a huge hurdle—especially when you think you need tens of thousands of dollars saved for a down payment. The good news? While true zero-down mortgages are virtually unavailable in Canada today, you can get extremely close using smart strategies, government programs, and creative financing. Here’s how you can aim to buy your first home with very little upfront cash, and set yourself up for success in 2025.
Understanding the Down Payment Requirements in Canada
According to official rules from the Financial Consumer Agency of Canada (FCAC), the minimum down payment depends on the purchase price of the home:
- If the home costs $500,000 or less → minimum down payment is 5% of the purchase price. (Government of Canada)
- If the home costs $500,001 to $1,000,000 → minimum down payment is 5% of the first $500,000 + 10% of the amount above $500,000. (LowestRates)
- If the home costs $1,000,000 or more → minimum down payment is 20%. (LowestRates)
That means a “zero down” purchase in the traditional sense is blocked out by regulation. As one mortgage advisor puts it, “Unfortunately no. There are currently no approved programs in Canada that allow borrowers to secure mortgage financing for 100% of a property’s value.” (firstfoundation.ca)
But don’t let that discourage you. With the right tools and strategies, you can get very close to zero-down and move into your first home without thousands sitting in your account.
Strategy #1: Use Government First‐Time Buyer Programs
Several federal and provincial programs help reduce upfront costs for first-time homebuyers in Canada.
• First‑Time Home Buyer Incentive (FTHBI)
This shared-equity program allowed eligible first-time buyers to get 5 % or 10 % of the home’s purchase price from the federal government toward their down payment, which reduces monthly mortgage payments. (homesbyandrew.ca)
Important Note: Some sources suggest the program has been discontinued or closed to new applications. (Reddit)
• Home Buyers’ Plan (HBP)
This allows first‐time buyers to withdraw funds from their Registered Retirement Savings Plan (RRSP) tax-free for a down payment (up to certain limits). (Chris Allard)
• First Home Savings Account (FHSA)
Introduced recently, the FHSA lets first-time homebuyers save up to a lifetime limit (e.g., $40,000) tax-deductible and then use withdrawals tax-free for a first home. (Zolo)
These programs aim to reduce the cash you need upfront—though they don’t entirely eliminate the down payment requirement.
Strategy #2: Gifted or Borrowed Down Payment (“Flex-Down”)
If you don’t have cash saved up, there are creative options:
- Gifted down payment: A family member can gift you the down payment. You’ll need a “gift letter” stating the money does not need to be repaid. Lenders will still assess your ability to carry the mortgage. (stories.brookfieldresidential.com)
- Flex-Down program / borrowing the down payment: Some lenders allow you to borrow the down payment via a personal loan, line of credit or HELOC. However, this increases your debt load and may make you higher risk. (Chris Allard)
Caution: Borrowing your down payment means you’re increasing your overall debt prior to even securing the mortgage, which may affect your debt-service ratios and affordability tests.
Strategy #3: Lowering the Upfront Cost Barrier
Beyond down payment, consider these cost-reducing strategies:
- Use FHSA or HBP funds so you’re not using cash sitting in your chequing account.
- Apply for first-time buyer rebates or tax credits (e.g., land transfer tax rebates in some provinces). (homesbyandrew.ca)
- Choose a property in a price segment where the down payment % is lower (e.g., homes under $500,000 have 5% minimum).
- Keep closing costs in mind. Even if you minimize your down payment, you’ll still need funds for legal fees, title insurance, home inspection, etc. Some advisors say having at least ~1.5%–2% of the purchase price in liquid funds as a buffer is wise. (lp.thecanadianhome.com)
Step-by-Step: How to Make It Work
Here’s a simplified roadmap you can follow to buy your first home with minimal upfront funds.
Step 1: Confirm you’re a First-Time Buyer
To qualify for many programs you should not have owned a principal residence in the last 4 years (or meet first-time buyer criteria in your province). (CMHC)
Step 2: Evaluate your budget & debt
Check your credit score, verify income stability, and minimize other debts. Lenders will assess your debt-service-ratio (mortgage payments + other debts vs income).
Step 3: Explore and apply for assistance programs
- Open an FHSA if eligible and start contributing.
- If you have RRSP funds, evaluate using the HBP withdrawal.
- Investigate whether the FTHBI (or equivalent) is still active in your area.
Step 4: Use a gifted or borrowed down payment (if needed)
If you don’t have cash savings, set up a gift letter (family) or arrange a personal line of credit/HELOC (carefully).
Step 5: Choose a property within your affordability limit
Consider buying a property where the minimum down payment is as low as 5% (purchase price ≤ $500k) to reduce your upfront cash burden.
Step 6: Get pre-approved for a mortgage
A mortgage pre-approval will give you a realistic purchase price and let you shop with confidence.
Step 7: Budget for closing costs & other moving expenses
Even if your down payment is minimal, you’ll need funds for legal fees, land transfer tax (if applicable), home inspection, moving costs, and maybe some initial repairs/maintenance.
Step 8: Proceed with purchase and manage the mortgage responsibly
Once you own the home, maintain financial discipline. Ensure you stay ahead on your mortgage, property taxes, insurance and ongoing maintenance costs.
Risks & Things to Watch
Buying with minimal or borrowed down payment comes with risks:
- Higher loan to value (LTV): If you put down only 5%, your LTV ratio is high => any decline in property value might leave you “underwater”.
- Mortgage insurance required: If your down payment is less than 20%, you must pay mortgage default insurance (via Canada Mortgage and Housing Corporation CMHC or another provider) — this adds to your cost. (MapleMoney)
- Borrowed down payment increases your debt load: This can limit your financial flexibility and may affect future borrowing or refinancing.
- Interest rates and amortization matters: With economic uncertainty, ensure you lock into favourable mortgage terms and stay within budget.
- Ownership costs: Owning a home means maintenance, property taxes, insurance, potential condo fees — these add up and must fit into your budget.
Final Thoughts
While a true zero-down mortgage isn’t readily attainable in Canada today, you absolutely can buy your first home with very little upfront cash using the right mix of government programs (FHSA, HBP, rebates), family gifts, and smart budgeting.
Here’s the takeaway:
- Aim to bring as little “out of pocket” as possible—but always have a buffer for closing costs and initial expenses.
- Use programs like the FHSA and HBP to reduce the cash you need to bring.
- Choose a home price level where the minimum down payment requirement is low (e.g., 5%).
- Stay disciplined with debts and prepare for ownership costs beyond just the mortgage.
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