Why Saving a Down Payment Is the Biggest Barrier to Homeownership in Canada

If you have ever felt like you are doing everything “right” but still cannot get ahead, you are not alone. Many Canadians want to own a home, yet the path feels blocked before it even starts. It is not usually the monthly mortgage payment people fear most. It is the down payment.

For first-time buyers, the down payment has become the single biggest barrier to homeownership in Canada. It is the moment the system asks you to prove you already have wealth before you can start building it.

How down payments work in Canada

In Canada, your down payment is the amount you pay upfront when buying a home. If your down payment is under 20%, you typically need mortgage loan insurance (often called mortgage default insurance).

Minimum down payment requirements depend on the home price. CMHC outlines the minimums clearly: 5% on the first $500,000, plus 10% on any amount above $500,000 up to $1.5 million. Homes at $1.5 million or more require at least 20% down, and CMHC insurance is not available.

These rules are straightforward on paper. The challenge is what they mean in real life: in many Canadian markets, even a “minimum” down payment can represent years of saving.

Why saving a down payment has become so difficult

1) Rent is rising faster than people can save

When rent takes up most of your income, there is little left to build a down payment. Statistics Canada reported rent prices rose 8.2% in 2024 (after 6.5% in 2023).  When your housing cost climbs faster than your ability to save, the down payment becomes a moving target.

2) The cost of “waiting” is not neutral

Many people try to “wait a few years” to save more. But during those years, you are still paying rent, and home prices can change faster than your savings rate. Even when prices flatten, the time cost is real: you are paying for shelter without building ownership.

3) Wages and household budgets are under strain

Even beyond rent, essentials like utilities, insurance, transportation, and food take a larger share of income than they used to. Statistics Canada noted that consumption growth outpaced disposable income growth in 2025, with relatively weak wage gains contributing to pressure on household saving.

The result is not a lack of discipline. It is a structural squeeze: people are paying more just to stay stable, which makes saving a large lump sum far harder.

Why common “solutions” often fall short

When people search for ways around a down payment, they often land on the same options:

Rent-To-Own

Rent to own in Canada is frequently marketed as a path to homeownership, but many models still require an upfront deposit and higher monthly payments. It can feel like paying more while still carrying uncertainty. For some households, that extra monthly burden makes saving and qualifying harder, not easier. This is why many people look for rent to own alternatives in Canada that do not increase monthly pressure.

Family Help

Gifted down payments can work for some, but it is not a solution the system can rely on. Many Canadians do not have that option, and it can deepen inequality between those who do and those who do not.

Extreme budgeting and side hustles

These can help at the margins, but they rarely close the gap in high-cost markets. They also place the burden entirely on individuals, even though the barrier is systemic.

A structural problem needs a structural answer

Here is the hard truth: if the only way into homeownership is a large upfront down payment, millions of capable, responsible renters will remain locked out.

That is why alternative homeownership models are gaining attention. A fairer path to homeownership in Canada does not ask people to take on more financial pressure in order to qualify. Instead, it aims to reduce the upfront barrier and make the transition from renting to owning realistic.

One way to think about it is this: the system works best when time helps you, not hurts you.

When affordability is stretched, even ownership costs can become overwhelming. For example, an RBC affordability report noted that ownership costs can represent nearly 68% of an average household’s income, which shows just how challenging the market remains for many buyers.  If monthly costs are already that high, adding higher rent-to-own payments or large upfront deposits can push people further away from qualifying.

What to look for in a fairer pathway

If you are exploring options, here is what tends to matter most:

• No large down payment required to participate upfront

• No inflated monthly payments that create extra strain

• A clear, transparent path that keeps your future open

• Support that helps you become mortgage-ready over time

  
  

The goal is not to promise instant ownership. The goal is to remove the biggest barrier that blocks capable renters from ever getting started. IGV Impact can help you provide you with options.

For many Canadians, the down payment is not just a number. It is a gate. And right now, that gate is keeping too many people out.

If we want homeownership to be realistic again, the system needs pathways that do not rely on impossible upfront hurdles. The strongest solutions will be the ones that reduce pressure, increase stability, and let people move toward ownership over time, without asking them to take on risk they cannot carry.