The Zero Down Program: The Truth
Direct answer: there is no government Zero Down Program in Canada, and there is no true zero-down mortgage. One hundred percent financing has been prohibited since 2008, and every insured mortgage requires a minimum down payment of at least 5% on the first $500,000. What "zero down" advertising usually means is a borrowed down payment — a legitimate but narrow product with strict rules and real costs. This post explains what it is, who qualifies, and the smarter low-savings paths most buyers should use instead.
There Is No Zero-Down Mortgage in Canada — Here's the Truth
Canadian rules require a minimum down payment. At $500,000 or less, that minimum is 5%. From $500,001 to $1,499,999, it is 5% of the first $500,000 plus 10% of the remainder — $55,000 on an $800,000 home. At $1,500,000 or more, the minimum is 20%, and mortgage default insurance is not available at or above that price.
True zero-down mortgages, where the lender financed 100% of the price, were prohibited in 2008. They have not come back, and no federal or Ontario program in 2026 lets anyone buy with no down payment money involved at all. When an ad says "zero down," it almost always means zero dollars saved by you, with the down payment borrowed from somewhere else. That is a very different thing, with different risks.
The distinction matters for trust as much as money. A buyer who starts out expecting a government program that does not exist wastes weeks and may grab the first product sold to them. A buyer who understands the real options — borrowed down payment products, gifted down payments, and the federal savings programs — can compare them honestly. One more program to clear away: the First-Time Home Buyer Incentive closed to new applications on March 21, 2024. It was never a zero-down program, and it is not available now.
What "Zero Down" Ads Actually Mean: Borrowed Down Payments
The product behind the advertising is commonly called Flex Down, and a similar offering is Canada Guaranty's Flex 95. Instead of saving the minimum down payment, you borrow it — typically from a personal loan or an unsecured line of credit — and use those funds as your down payment on an insured mortgage.
This works only because certain insurers, such as Sagen and Canada Guaranty, offer products that permit borrowed down payment sources. The standard insured mortgage does not: under the standard CMHC-insured product, your minimum down payment cannot be borrowed. So the first question in any "zero down" conversation is which insurer and which product is being used, because the rules are not the same across the market.
Flex Down is also not a way around the other costs of buying. Closing costs are still yours, in cash: budget 1.5% to 4% of the price, including land transfer tax — $12,475 in Ontario on an $800,000 home, $24,950 gross in Toronto — plus legal fees of $1,500 to $3,000, an inspection at $400 to $700, title insurance at $250 to $500, and an appraisal at $300 to $500. Translate the slogan accurately: zero saved, down payment borrowed, closing costs still in cash, and a second loan payment added to your budget. For a few buyers that trade is worth it. For most, it is not.
How Flex Down / Flex 95 Works
The mechanics are simple. You arrange a separate loan or line of credit for the down payment amount, and those funds become your down payment. You then carry two obligations at once: the mortgage on the home, and repayment of the borrowed down payment.
Because the down payment is under 20%, the mortgage must be insured, through an insurer that permits this structure. Premiums follow the normal bands on a 25-year amortization: 4.00% of the mortgage at 5% to 9.99% down, 3.10% at 10% to 14.99%, and 2.80% at 15% to 19.99%. Most borrowed-down-payment buyers sit at the minimum, which means the highest band. The premium is added to your balance, and Ontario's 8% PST on it is cash at closing.
You must also qualify under the stress test, at the higher of your contract rate plus 2% or 5.25%, with the borrowed repayment included in your debts — the crucial detail in the next section. The lender and insurer will want the down payment's source and the loan behind it fully documented. Nothing about this is hidden or informal. And the loan must be in place before closing, your deposit is due shortly after acceptance, and your closing costs must be available in cash, so the full structure should be reviewed by a licensed mortgage professional before you make an offer, not after.
The Hidden Cost: That Loan Counts Against You
Here is what the ads leave out. The repayment on your borrowed down payment counts as a debt in your Total Debt Service ratio, or TDS. Your TDS — housing costs plus all other debt payments — must generally stay at or below 44% of gross income, while housing costs alone must fit a 39% Gross Debt Service ratio.
So borrowing your down payment shrinks the mortgage you can qualify for. Every dollar of monthly loan repayment is a dollar that cannot go toward your mortgage payment in the qualifying math. A buyer who borrows to "get in sooner" may qualify for a noticeably smaller mortgage than a buyer with the same income who saved the same down payment, because the saver carries no extra monthly payment.
You also pay interest twice on overlapping money: on the loan you borrowed, and on a mortgage balance that includes the insurance premium. And you start with no equity cushion and no savings buffer, in a market where the GTA average price fell 5.1% year over year in September 2026, to $1,006,409. If prices soften further, a buyer who borrowed the whole down payment can owe close to the home's value, with a loan payment still running. None of this makes Flex Down a scam. It makes it a tool with a price — worth paying only if getting in now genuinely beats waiting and saving for your income, credit, and timeline.
Who Actually Qualifies (and Who Doesn't)
Borrowed-down-payment products are built for a narrow profile. You generally need strong, clean credit — well above the 600 minimum for an insured mortgage, in the range prime lending expects, where 680 or higher is the usual benchmark. You need stable, provable income that still passes the stress test after the loan payment joins your TDS. And you need cash for closing costs, the deposit, and the 8% PST on the premium, none of which the product covers.
Who does not qualify matters just as much. Buyers whose TDS is already near 44% from a car loan, student debt, or credit cards have no room for another payment. Buyers with bruised or thin credit are unlikely to be approved for the unsecured borrowing at a tolerable rate. Purchases at or above $1.5 million sit outside the insured system entirely. And buyers with no cash at all cannot close, because closing costs are not covered by this structure.
Be wary of anyone who skips these questions. A responsible Flex Down conversation starts with your credit, your full debt list, and your closing cash — and includes the honest possibility that the answer is "not yet."
| Route | Down payment source | Counts in your debts? |
|---|---|---|
| Standard insured mortgage | Your savings or a gift — minimum cannot be borrowed | No extra loan payment |
| Flex Down / Flex 95 type | Borrowed — personal loan or line of credit | Yes — repayment is included in TDS |
| Gifted down payment | Gift from immediate family, with a gift letter | No — if it is a true gift, not a loan |
Smarter Paths That Need Little or No Savings
For most buyers with little saved, the smarter path is not borrowing the down payment. It is shrinking the gap and using the programs built for this situation.
Start with the minimum itself. Because the minimum is 5% only on the first $500,000, price decides how much you truly need. A $500,000 purchase needs $25,000 down, and a condo near the GTA's September 2026 average condo price of $605,257 needs a minimum in the mid-$30,000s — not the six figures many renters imagine. Choosing a home type and city that fits a reachable minimum is a real strategy: Brampton averaged $854,322 that month, against $1,034,320 in Toronto.
Then stack the programs. Open a First Home Savings Account now: $8,000 per year, $40,000 lifetime, deductible contributions, a tax-free qualifying withdrawal, no repayment, and room that only starts once the account is open. Use the Home Buyers' Plan if you have RRSP savings: up to $60,000 per person, $120,000 per couple, repaid over 15 years. Together a couple can structure up to $200,000. Claim land transfer tax rebates if you qualify — up to $4,000 Ontario and $4,475 Toronto — plus the $10,000 Home Buyers' Tax Credit amount, worth up to $1,500. Eligible first-time buyers of newly built homes may also qualify for the federal GST/HST rebate of up to $50,000 on homes to $1 million, for agreements on or after March 20, 2025.
A gifted down payment from immediate family is the other honest low-savings route. Unlike a borrowed one, a true gift adds no monthly payment to your TDS. It must be documented with a signed gift letter and be in your account on the lender's timeline. Finally, consider the calendar: with GTA prices down 5.1% year over year and homes taking 51 total days to sell, a short, focused saving period — FHSA filling, pre-approval ready — leaves most buyers stronger than a borrowed down payment would today.
Frequently Asked Questions
Is the mortgage literally zero down?
No. No Canadian mortgage is literally zero down. True 100% financing has been prohibited since 2008, and insured mortgages require at least 5% down on the first $500,000. Products advertised as zero down use a borrowed down payment: the money still exists, you have simply taken a loan for it instead of saving it.
Can I buy a house in Canada with no down payment?
Not with no down payment at all. You may be able to buy with none saved, using a down payment product such as Flex Down or Flex 95, if your credit is strong, your income is stable, and you hold cash for closing costs. A gifted down payment from immediate family is the other route, with no debt payment.
May a personal loan fund the down payment?
Sometimes, under specific products only. Standard CMHC-insured mortgages do not allow the minimum down payment to be borrowed. Certain insurer programs, such as Flex Down and Canada Guaranty Flex 95 type products, permit borrowed sources like a personal loan or line of credit. The repayment counts in your Total Debt Service ratio, reducing the mortgage you can qualify for.
Is a zero-down mortgage legal in Canada?
A zero-down mortgage financing 100% of the price is not legal in Canada and has been prohibited since 2008. What is legal is a borrowed down payment under specific insured products that permit it, fully disclosed to the lender and insurer. Any claim that a Zero Down Program exists, or that borrowing should be hidden, is a red flag.
What credit score do I need for a borrowed down payment?
Expect to need strong credit. The floor for an insured mortgage is 600, and 680 or higher is generally required for prime rates, but borrowed-down-payment products target clean, well-established files well above the floor. The lender must approve both the mortgage and your ability to carry the extra loan payment within a 44% TDS ratio under the stress test.
Looking to Buy or Sell in Toronto & GTA?
Work With Raj Gill. If you have little saved and want an honest read on your options — borrowed down payment, a gifted down payment, or a short saving plan with an FHSA — talk it through before applying for anything. Call Raj Gill at (647) 657-4224 or email nestkey11@gmail.com for a straight conversation about your income, credit, and timeline.