Borrowed down payment mortgages in Canada

Who this is for

• You have stable, documentable income and strong credit.
• You can carry both the mortgage and the separate down payment debt.
• Saving the full minimum down payment is the main barrier—not weak credit or unaffordable monthly costs.
• You are buying an eligible owner-occupied home through a lender that offers one of these insurer programs.

This is not a bad-credit program. Borrowing the down payment adds risk, so insurers and lenders expect a strong overall file.

The three insurer versions

Not every lender offers every insurer or every program. That is where a broker matters: Rahul can compare participating lenders instead of treating one bank's policy as the whole market.

How qualification works

1. 1Confirm the down payment source is eligible and arm's-length where required.
2. 2Document your income, credit, existing debts, and the borrowed funds or gift.
3. 3Add the required payment on the borrowed down payment to your Total Debt Service ratio.
4. 4Qualify the mortgage at the greater of the contract mortgage rate plus 2% or 5.25%.
5. 5Keep Gross Debt Service at or below 39% and Total Debt Service at or below 44%, subject to insurer and lender approval.

The real cost

The borrowed down payment creates its own monthly payment, and that payment counts in TDS. At 90.01%–95% LTV, the mortgage default insurance premium for a non-traditional or borrowed down payment is 4.50% of the insured loan amount for amortizations up to 25 years. Where a 30-year insured amortization is available, the additional 0.20% surcharge makes the premium 4.70%. Standard insured premiums are lower.

So this strategy can get you into a home sooner, but it can also reduce your buying power and increase both your monthly obligations and insured mortgage balance. Rahul will compare that cost with waiting, saving, receiving an eligible family gift, or using a provincial assistance program.

Canada Guaranty property limits

• Purchase transactions only—not refinances.
• Maximum two units, with one unit owner-occupied.
• Property value must be under $1,000,000 at 80% LTV or less, or under $1,500,000 above 80% LTV.
• At $500,000 or less, the minimum down payment is 5%.
• Above $500,000, the minimum is 5% on the first $500,000 plus 10% on the portion above $500,000.
• No third-party or non-occupying guarantors.

Other insurers and lenders apply their own eligibility details. We confirm the current rules before recommending a structure.

What you will need

• Photo ID and consent to review credit.
• Standard income documents, such as pay stubs, employment letters, and tax documents where needed.
• Statements and agreements showing the exact down payment source, balance, payment, and terms.
• Purchase agreement and property details once you have an accepted offer.
• Proof of separate closing costs from an acceptable source.

Official program sources

• CMHC Purchase and its non-traditional down payment guidance
• Canada Guaranty Flex 95 Advantage™ product sheet
• Sagen Borrowed Down Payment Program and premium rates chart

Frequently asked questions