Ontario Down Payment Rules Explained: How Much You Really Need to Buy a Home
Thinking about buying a home in Ontario? Your down payment plays a huge role in what you can afford, your monthly payment, and your long‑term mortgage strategy. Here’s a clear, simple breakdown of how down payments work — and how to plan smart.
What is a Down Payment?
A down payment is the amount of money you pay upfront when purchasing a home in Ontario. It represents your initial equity in the property and directly impacts how much you need to borrow through a mortgage.
The larger your down payment, the smaller your mortgage balance — which can mean lower monthly payments, less interest paid over time, and more flexibility with lenders. That’s why understanding down payment rules is one of the most important first steps in the home-buying process.
Minimum Down Payment Requirements in Ontario
In Ontario (and across Canada), minimum down payment rules are based on the purchase price of the home:
🏡 Homes priced at $500,000 or less
- Minimum down payment: 5% of the purchase price
🏡 Homes priced between $500,000 and $999,999
- 5% on the first $500,000
- 10% on the portion above $500,000
🏡 Homes priced at $1,000,000 or more
- Minimum down payment: 20% of the purchase price
These rules apply whether you’re a first-time buyer or a repeat buyer.
Down Payment Example
Let’s break it down with a real example:
Purchase price: $750,000
- 5% of the first $500,000 = $25,000
- 10% of the remaining $250,000 = $25,000
Minimum required down payment: $50,000
Understanding this calculation upfront helps you plan your savings and avoid surprises when you’re ready to make an offer.
Why Is a Down Payment So Important?
Your down payment affects more than just your ability to buy a home:
✔️ Lower mortgage amount
✔️ Potentially better interest rates
✔️ Lower monthly payments
✔️ Reduced borrowing costs over time
Lenders see a larger down payment as lower risk, which can open the door to better mortgage terms and more options.
What Is Mortgage Loan Insurance?
If your down payment is less than 20%, your mortgage is considered high-ratio, and mortgage loan insurance is required.
This insurance protects the lender — not you — and is provided by insurers such as:
- Canada Mortgage and Housing Corporation (CMHC)
- Sagen
- Canada Guaranty
How it works:
- The premium is based on the size of your down payment
- It’s typically added to your mortgage, not paid upfront
- Smaller down payments = higher insurance premiums
While mortgage insurance adds to your costs, it allows many buyers to purchase sooner with a smaller down payment.
How to Save for a Down Payment
Saving for a down payment can feel overwhelming, but with the right plan, it’s achievable.
Smart strategies include:
- Creating a dedicated savings plan
- Automating monthly contributions
- Reducing high-interest debt
- Planning your purchase timeline early
There are also government programs designed to help buyers get there faster.
Programs That Can Help With Your Down Payment
🏦 Home Buyers’ Plan (HBP)
- Withdraw up to $60,000 per person from your RRSP
- Funds are tax-free when used for a qualifying home purchase
- Must be repaid over time
🏦 First Home Savings Account (FHSA)
- Contribute up to $8,000 per year, $40,000 lifetime
- Contributions are tax-deductible
- Withdrawals for a first home are tax-free
🏦 TFSA & RRSP Savings
TFSA: flexible, tax-free growth
RRSP: tax deductions + HBP access
Choosing the right mix depends on your income, timeline, and long-term goals.
Final Thoughts: Planning Sets You Up for Success
Understanding down payments is a key step to buying a home confidently in Ontario. When you know the rules, your options, and the tools available, you can plan strategically instead of guessing.
Whether you’re buying your first home, upgrading, or returning to the market, a clear down payment plan can make the entire mortgage process smoother and less stressful.
If you want help reviewing your numbers or building a realistic path to homeownership, a quick conversation can make all the difference.
Ready to Plan Your Down Payment With Confidence?
Whether you’re a first‑time home buyer, upgrading, or returning to the market, having a clear down payment strategy can save you time, stress, and thousands of dollars over the life of your mortgage.
I help Ontario buyers understand:
- How much they really need to buy
- Which programs they qualify for
- How to structure their mortgage for long‑term success
Book a quick, no‑pressure call or send a message to get started.
📞 519‑339‑0883
📧 [email protected]
🌐 www.chatwithashley.ca