Posthaste: High down payments keep Canadians out of homeownership

Canadians trying to own a home are running into a big hurdle: high down-payment costs. A new survey finds that one third of Canadians say the amount needed upfront is keeping them from buying a house. Even though mortgage rules allow for smaller down payments—with programs letting buyers put down just 5%—the reality is many first-time buyers still struggle to gather enough money.

Typical first-time buyers are usually in their early 30s, and they often have to put together tens of thousands of dollars just to start the process. This “first step” payment is much more than most people have saved. These buyers also face additional pressures, including interest rates, mortgage insurance, home insurance, and property taxes. Many say rent equals or even exceeds what a monthly mortgage payment would cost, but the kicker is still the upfront cash.

Canada has programs to help with down payments, such as the First-Time Home Buyers Incentive. It gives 5% of the price for an existing home, or 10% for a new build, in exchange for sharing future gains or losses. But there are limits: total household income must be under \$120,000, and the home price capped around \$565,000. That still doesn’t reach the average Canadian home, which now costs around \$817,000—more than nine times the average household income.

While some suggest lowering down-payment requirements even more, experts warn that doing so won’t solve the real issue. Many say cheaper housing supply—more homes overall—is the key. Online, people often point out that the high upfront cost is just a symptom; the core problem is that home prices have soared far beyond most incomes. As one person put it, “It’s the prices.”

Otherwise, critics argue that reducing down-payment rules could let people take on more debt than they can handle, raising the risk of defaults and debt problems—just like happened during the 2008 financial crisis in the US. Stricter down-payment rules in Canada helped protect many families during that time by keeping risky borrowing in check.

For now, first-time buyers are caught in a pinch. They face tight lending rules, rising interest rates, and down payments they just can’t save fast enough to reach. To truly open the door to homeownership, many advocates say the government needs to focus on boosting housing supply, updating zoning laws, and making it easier to build more homes—so the market shifts toward affordability, not just easier borrowing.