Can You Borrow Your Down Payment for a Home in British Columbia?

If your savings fall short of the down payment on a home in British Columbia, you may wonder whether a personal loan or a line of credit can fill the gap. The short answer is that it is usually not allowed, but there is a narrow exception for some buyers.

This article explains the normal rule, the CMHC exception, what the exception costs, and the limits that catch people out. It is general information. Lenders set their own policies, so confirm the details for your situation before you make an offer.

This article covers the law of British Columbia.

The normal rule: the down payment is your own money

Normally the minimum down payment must come from the buyer's own funds. That means savings, proceeds from selling an asset, or similar money that is genuinely yours, rather than money you have borrowed for the purpose.

The minimum itself depends on the price. It is 5% of the purchase price if the price is $500,000 or less. For a price between $500,000 and $1.5 million, it is 5% of the first $500,000 plus 10% of the amount above $500,000. At $1.5 million or more, it is 20% of the whole price.

The CMHC exception for borrowed down payments

CMHC lets some borrowers buying 1 to 2 unit homes, who have a strong credit history, use a non-traditional down payment, such as an unsecured personal loan or line of credit, at 90.01% to 95% loan-to-value. Loan-to-value (LTV) compares the mortgage to the value of the home, so 95% LTV means about 5% down.

Whether you qualify turns on your credit history and on the lender's own approval. Not every lender offers this option, and a lender can still say no, so ask early.

What the borrowed route costs

Mortgage loan insurance is typically needed if your down payment is less than 20% of the purchase price. A lender may also require it with 20% down, usually if the borrower is self-employed or has a poor credit history. Insurance protects the lender, not you, but the lender likely passes the cost to you. You can pay a lump sum or add it to the mortgage and pay over time.

For the top loan-to-value band, the CMHC premium is higher when the down payment is non-traditional. The premium is charged on the total loan amount and is a one-time charge that may be added to the insured loan.

To see how the minimum down payment works in practice, take a $1 million home: 5% of the first $500,000 ($25,000) plus 10% of the other $500,000 ($50,000) gives a minimum of $75,000, but only if the lender and insurer accept it. The premium is a percentage of the total loan, so the dollar gap between the 4.00% and 4.50% tiers depends on your loan amount. If the premium is added to the mortgage, you also pay interest on it over time.

How much of your down payment a lender will accept as borrowed depends on the lender's and CMHC's rules, so confirm that in advance.

Limits that can rule you out

• The home must be intended for owner occupancy, and the price or lending value must be below $1,500,000.
• The non-traditional option is for borrowers buying 1 to 2 unit homes.
• Rental and investment properties are not eligible for CMHC's 5%-down homeowner product, and small rental loans have a maximum price or lending value of $1,000,000.
• Mortgage insurance is not available on homes priced at $1.5 million or more, so those buyers need 20% down and an uninsured mortgage.
• The insured price cap rose from $1 million to $1.5 million effective December 15, 2024. Some consumer pages still show the older wording, so for a home between $1 million and $1.5 million, check with your lender.

Also remember that lenders look at more than the down payment. A borrowed down payment adds a new debt, and the lender will weigh that debt when it reviews your income and obligations. How it affects your approval varies by lender.

What to do next

Pre-approval is the best time to raise this. Lenders review your assets, income and debt to estimate the most they might lend and at what rate, but pre-approval does not guarantee approval. The amount is a ceiling, not a commitment. The final amount depends on the property's value and your down payment, the property must meet the lender's standards, and the lender can still refuse after pre-approval.

• Ask your lender or mortgage broker whether it accepts a borrowed down payment under CMHC's non-traditional option.
• Confirm that the home is a 1 to 2 unit property you will live in, and that the price is under $1,500,000.
• Gather your ID, proof of employment, and proof of your down payment and closing costs. If you are self-employed, add two years of CRA notices of assessment.
• Ask how long your pre-approved rate is guaranteed, whether you get a lower rate if rates fall, and whether the pre-approval can be extended.
• Ask for the premium in dollars for both the 4.00% and 4.50% tiers, and whether it will be added to the mortgage.
• Speak with a lawyer or accountant if your funds come from several sources or your finances are complicated.

Frequently asked questions