In Canada, homes priced at or above $1.5 million cannot be purchased with mortgage default insurance, which means buyers need a minimum down payment of 20%. This cap was raised from $1 million to $1.5 million effective December 15, 2024, according to the Department of Finance Canada and the Canada Gazette Part II (SOR/2025-55). It's one of several changes introduced together that same day to improve affordability for buyers relying on insured financing.
What mortgage default insurance does
Mortgage default insurance, offered by providers like CMHC, protects the lender if a borrower defaults, and it's what allows buyers to purchase a home with a down payment below 20%. It's generally required whenever the down payment is under 20%, and it's only available on homes under the insured price cap. Once a purchase price crosses that cap, insurance isn't available no matter how small the down payment would otherwise be, and the buyer moves into uninsured financing territory automatically.
Why the cap moved to $1.5 million
The price cap had been set at $1 million for years, and home prices in many Canadian markets had climbed well beyond that figure, pushing more buyers out of insured financing and into larger required down payments than they may have planned for. The Department of Finance Canada raised the cap to $1.5 million effective December 15, 2024, to better reflect current home prices and keep low-down-payment options available to more buyers, particularly in higher-cost markets across the country.
How the down payment tiers work
Minimum down payment requirements are tiered based on purchase price. You need 5% down on the portion of the price up to $500,000, and 10% down on the portion from $500,000 up to $1.5 million. For a home priced at or above $1.5 million, mortgage insurance isn't available at all, so you need at least 20% down on the full purchase price. These tiers took effect as part of the same December 15, 2024 reform package as the cap increase, replacing the previous tier structure tied to the $1 million cap.
What happens above the cap
If you're buying a home priced at $1.5 million or more, you're automatically in uninsured mortgage territory, which means a minimum 20% down payment and underwriting standards set directly by your lender rather than by an insurer. Uninsured mortgages can also come with different rate pricing than insured ones, since the lender is carrying more of the default risk itself rather than transferring it to an insurer like CMHC.
Planning around the cap
If your target purchase price sits close to $1.5 million, it's worth planning carefully, since crossing that threshold changes your minimum down payment requirement significantly and affects how your mortgage is underwritten. A mortgage broker can walk you through how the cap and the down payment tiers apply to your specific purchase price, and can help you compare insured and uninsured options if your budget puts you near the line.
Why this matters for buyers saving toward a down payment
Knowing where the cap sits can shape how you save. A First Home Savings Account (FHSA) lets eligible savers contribute up to $8,000 a year toward a down payment, with a $40,000 lifetime limit, according to the Canada Revenue Agency. Unused contribution room carries forward up to $8,000, so a saver with one year of carry-forward room could contribute as much as $16,000 in a single year, which can meaningfully speed up how quickly you reach the down payment tier you're aiming for.
Have questions about your situation? An advisor can walk you through it.