The short answer
| Cottage | Minimum down | Insurance |
|---|---|---|
| Year-round, you or family use it, below $1,500,000 | 5% on the first $500,000, 10% on the portion above | Sagen or Canada Guaranty |
| Seasonal (not winterized or seasonal road) | 10%, from your own resources | Sagen only |
| Any cottage at $1,500,000 or more | 20% | Not available |
| Rental or investment cottage | Usually 20% or more | Not available from the insurers |
| Boat-access cottage | Possibly 10% for an eligible insured Type B property; lender-specific otherwise | Sagen Type B permits boat access; not all lenders participate |
Try your own numbers in the calculator below, then read on for the fine print that decides which row you land in.
Buying a year-round cottage with 5% down
Yes, if the cottage is year-round. Sagen and Canada Guaranty both insure second homes up to 95% of the price, so the minimum is 5% on the first $500,000 and 10% on the portion from $500,000 to $1,500,000. The cottage must be one unit, winterized, reachable year-round and used by you or an immediate family member. It has to be the kind of place that resells easily.
| Price | Minimum down | Mortgage before premium |
|---|---|---|
| $450,000 | $22,500 | $427,500 |
| $650,000 | $40,000 | $610,000 |
| $900,000 | $65,000 | $835,000 |
| $1,500,000 | $300,000 (20%, uninsured) | $1,200,000 |
Use recent completed sales of comparable properties on the same lake or nearby competing lakes. Match road access, waterfront quality, lot size, condition and permitted use. Provincial reports and asking prices cannot establish what one cottage is worth.
Down payment for a seasonal cottage
A three-season cottage, or one on a road that is not ploughed in winter, can be insured by Sagen up to 90% of the price. That means at least 10% down. Sagen requires that down payment to come from your own resources: savings, an RRSP withdrawal, equity in your existing home or sale proceeds. Canada Guaranty does not insure non-winterized homes with seasonal access.
Without insurance, the lender assesses seasonal access, construction, services and resale potential. A 20% down payment is not a promise that the cottage will qualify. Send the listing and access details before relying on a financing estimate. See Type A vs Type B cottages.
When you need 20% or more
- At $1,500,000 or more. The federal cap on insured mortgages rose to $1,500,000 on December 15, 2024. Above that, there is no insurance and you need 20%.
- Rental or investment cottages. Insurers exclude rental properties, rental pools and timeshares. Plan on 20% or more. See second home vs investment property mortgages.
- Properties insurers decline. Islands without bridge access, many water access cottages and leased land usually need conventional or credit union financing. See water access and island cottage financing.
- You want to skip the premium. Putting 20% down removes default insurance altogether.
Talk to Jeff and Emily
Tell us about the cottage and we will tell you which down payment row you are really in.
Or call or text 416-628-9682
CMHC, Sagen and Canada Guaranty compared
No. CMHC stopped insuring second homes on May 30, 2014. That is why so many older articles say you need 20% down for a cottage. The two private insurers kept their programs, so low down payment cottage mortgages still exist.
| CMHC | Sagen | Canada Guaranty | |
|---|---|---|---|
| Insures second homes? | No, since May 30, 2014 | Yes | Yes |
| Year-round cottage | n/a | Up to 95% | Up to 95% |
| Seasonal cottage | n/a | Up to 90% | Not eligible |
| Island without bridge | n/a | Permitted under eligible Type B rules | Not eligible |
| Max price below 20% down | n/a | $1,500,000 | $1,500,000 |
What the insurance premium costs
The insurance premium is a one-time charge, usually added to your mortgage. It is a percentage of the loan, and it rises as your down payment falls. These are the Sagen bands we could confirm as of October 2026:
| Loan to value | Year-round (Type A) | Seasonal (Type B) |
|---|---|---|
| Up to 65% | 0.60% | 1.45% |
| 80.01% to 85% | 2.80% | 3.50% |
| 85.01% to 90% | 3.10% | 4.35% |
| 90.01% to 95% | 4.00% | Not available |
Example: a $650,000 year-round cottage with the $40,000 minimum down has a $610,000 loan, about 93.8% of the price. The 4.00% premium is $24,400, added to the mortgage. The same price as a seasonal cottage with 10% down has a $585,000 loan and a 4.35% premium of $25,448. Insurers change premiums without notice, and the bands between 65% and 80% are not shown here because we have not confirmed the seasonal figures. Confirm the current premium chart for the application.
Where the down payment can come from
- Savings, TFSA and non-registered investments. The simplest source.
- Home equity. A HELOC or refinance on your house. See using your HELOC to buy a cottage and the home equity calculator.
- RRSP withdrawals. Allowed, but taxed as income. The Home Buyers' Plan and FHSA cannot be used for a vacation property. See FHSA and RRSP for a cottage.
- Proceeds from a sale.
- Gifts. Often accepted for year-round cottages with a signed gift letter. For seasonal insured cottages, the own-resources rule means a gift needs a careful look first.
Lenders want to see where the money came from, usually 90 days of statements. Large unexplained deposits slow files down, so move money early and keep a paper trail.
Budget for closing costs too
Ontario also charges 8% provincial tax on mortgage default insurance premiums. That tax must be paid in cash rather than added to the mortgage. In the $650,000 year-round example, 8% of the $24,400 premium is $1,952. Down payment, $9,475 land transfer tax and premium tax total $51,427 before legal fees, inspections and adjustments.
You also need cash for closing costs. Ontario land transfer tax on a $650,000 cottage is $9,475, and there is no first-time buyer refund on a second property. Add legal fees, title insurance, inspections and adjustments. The closing costs calculator and our closing costs guide cover the full list.
Questions people ask
How much down payment do I need for a cottage in Canada?
Can I buy a cottage with 5% down?
What is the down payment for a seasonal cottage?
Do I need 20% down for a second home in Canada?
Can my cottage down payment be gifted?
How much is mortgage insurance on a cottage?
What is the down payment for a cottage over $1 million?
Sources
- Sagen: Vacation and secondary homes (checked 2026-10-12)
- Sagen: Insurance premium chart (checked 2026-10-12)
- Canada Guaranty: Lifestyle Advantage (checked 2026-10-12)
- Ontario: Calculating land transfer tax (checked 2026-10-12)
- Ontario: Retail sales tax on insurance (checked 2026-10-12)