Most buyers think the down payment is the whole cash problem. They are wrong. Down payment requirements in Canada set the floor, but your real cash-to-close in Ontario is usually higher once you add the deposit, closing costs, and lender conditions.
Down payment requirements in Canada: the quick answer
Yes, Canada has a basic federal minimum down payment framework for most standard residential purchases. The common structure is 5% on the first $500,000, 10% on the portion above $500,000 up to $1,499,999, and 20% at $1,500,000 or more. Property type, occupancy, and insurer or lender rules can still move the answer.
No, Ontario does not usually have its own separate minimum down payment percentages for an ordinary home purchase. What changes in Ontario is the total money you need to close, because land transfer tax, legal fees, title insurance, and adjustments can add thousands or tens of thousands depending on the property. I tell buyers to budget for the minimum down payment and then a separate closing-cost bucket.
No, a minimum down payment is not the same thing as automatic mortgage approval. Lenders still review your income, debts, credit, source of funds, and debt-service ratios like GDS and TDS before they advance mortgage money. GDS and TDS benchmarks commonly used in the market are about 39% and 44% respectively.
What a down payment is, and what counts toward it
A down payment is your upfront share of the purchase price, paid from your own acceptable funds instead of the mortgage. The mortgage covers the balance after the down payment, subject to lender approval and any mortgage loan insurance rules. Buyers usually need proof of where the money came from, not just proof that the money is sitting there.
Yes, several common sources can count toward down payment requirements Canada buyers deal with every day. Personal savings, TFSA funds, FHSA withdrawals, RRSP Home Buyers’ Plan withdrawals, sale proceeds from another property, and gifted down payment funds are all commonly seen, although lenders do not treat every source the same way. We regularly review the paper trail before closing because source-of-funds issues can delay funding.
No, cash on hand without a paper trail is not the same as acceptable down payment funds. Lenders commonly ask for 90 days of bank statements in straightforward files, or other proof showing buildup and transfer history. The exact documents depend on whether the funds are traditional savings, a gift, registered-plan withdrawals, or sale proceeds.
Minimum down payment rules by purchase price
Yes, the minimum down payment Canada formula is tiered, not one flat percentage. On a $300,000 purchase, 5% means $15,000; on a $500,000 purchase, 5% means $25,000. That is the easy part.
Yes, once the price goes over $500,000, the calculation splits into two layers. You still use 5% on the first $500,000, then 10% on the amount above $500,000 up to $1,499,999. That is where buyers using a down payment requirements calculator often make mistakes.
Yes, at $1,500,000 and above, the minimum down payment is 20% of the full purchase price. On a $1,500,000 purchase, that means $300,000. Rules change from time to time, so confirm current thresholds before you sign a firm agreement.
| Purchase price | Formula | Minimum down payment |
|---|---|---|
| $300,000 | 5% of full price | $15,000 |
| $400,000 | 5% of full price | $20,000 |
| $450,000 | 5% of full price | $22,500 |
| $500,000 | 5% of full price | $25,000 |
| $600,000 | $25,000 + 10% of $100,000 | $35,000 |
| $750,000 | $25,000 + 10% of $250,000 | $50,000 |
| $850,000 | $25,000 + 10% of $350,000 | $60,000 |
| $1,500,000 | 20% of full price | $300,000 |
Examples: how much down payment you need for common purchase prices
Yes, for a $300,000 house, the minimum down payment is $15,000. That is 5% of the purchase price, and it answers the common question about how much down payment for a house Ontario first-time buyer needs at that price point.
Yes, for a $400,000 home, the minimum is $20,000, and for a $450,000 home, the minimum is $22,500. Both are still inside the 5% tier.
Yes, for a $500,000 home in Canada, the minimum down payment is $25,000. I see buyers assume they need 20% for every purchase. They do not.
Yes, for a $600,000 home, the minimum is $35,000. The math is $25,000 on the first $500,000 plus $10,000 on the next $100,000.
Yes, for a $750,000 home, the minimum is $50,000, and for an $850,000 home, the minimum is $60,000. The amount rises faster after $500,000 because the second tier uses 10%.
Yes, for a $1,500,000 home, the minimum is $300,000. At that level, buyers also need to be ready for larger deposits and larger closing costs.
No, those examples do not include Ontario closing costs. In Toronto especially, land transfer tax alone can materially change your total cash needed, and legal fees, title insurance, adjustments, and lender charges add more. I have seen buyers who could cover the down payment but were short by $8,000 to $25,000 on the rest of closing.
Do down payment requirements differ in Ontario?
No, the base minimum down payment Ontario buyers usually face is generally the same federal framework used elsewhere in Canada for standard insured and uninsured residential lending. There is not a separate Toronto percentage for the minimum down payment on an ordinary purchase. What changes is affordability and cash-to-close.
Yes, Ontario can cost more to close even when the minimum down payment stays the same. Ontario land transfer tax applies across the province, and Toronto buyers may also face municipal land transfer tax, along with condo adjustments, status certificate costs baked into the transaction process, and ordinary legal closing expenses. Those are not part of the legal minimum down payment, but they are part of reality.
No, cities and provinces do not usually change the federal minimum percentage formula for a standard home, but they can change the total budget through taxes and fees. That is the practical difference behind Down payment requirements Ontario versus Down payment requirements Canada.
Deposit vs. down payment: not the same thing
No, a deposit is not the same as a down payment. The deposit is the money you pay with the offer or shortly after acceptance to show commitment, while the down payment is your total upfront contribution toward the purchase price. The deposit usually forms part of the down payment later.
Yes, the deposit vs down payment confusion causes real closing problems. If your agreement calls for a $25,000 deposit within 24 hours to 5 days, you need that cash available before closing day, even if your full down payment will be much larger and partly assembled later from other sources. I have seen buyers scramble because they thought the bank would cover the deposit. It will not.
No, there is no single legal deposit amount for Ontario purchases. Deposits are negotiated in the deal, and stronger markets often push them higher, while the minimum down payment is set by the mortgage framework and purchase price. We review the deposit clause because missing it can put a buyer in breach before the closing file even starts.
Quick comparison: deposit vs. down payment
– Deposit: paid early under the agreement; shows commitment; held in trust in the transaction. – Down payment: your total cash contribution toward the price; finalized on closing with the rest of your funds. – Relationship: the deposit usually counts toward the total down payment. – Risk: if you cannot pay the deposit on time, the deal can fall apart before financing is complete.
What happens if you put less than 20% down
Yes, if you put less than 20% down, the mortgage is generally considered high-ratio, and mortgage default insurance is usually required. The main insurers in this space are CMHC, Sagen, and Canada Guaranty. That insurance protects the lender, not the buyer.
Yes, mortgage loan insurance usually increases your total borrowing cost. Premiums are commonly added to the mortgage principal rather than paid fully in cash at closing, and market premium ranges are roughly 1.70% to 4.20% of the insured loan amount depending on the loan-to-value ratio. Exact schedules change, so verify current insurer tables.
No, less than 20% down does not automatically mean a bad decision. It often means higher total financing cost in exchange for buying sooner, and that trade-off can be sensible if prices, rent, savings pace, and job stability support it. I tell clients to compare the insurance cost with the cost of waiting, not just chase 20% as a slogan.
How your down payment affects mortgage approval, monthly payments, and affordability
Yes, a larger down payment usually improves mortgage approval odds because it reduces the loan amount. A smaller loan can improve GDS and TDS, reduce the insurance premium, and lower the monthly payment. That does not guarantee approval, but it helps.
No, salary alone does not tell you how much mortgage you can get with a $70,000 income or what income you need for a $400,000 mortgage in Canada. Lenders also test property taxes, heating costs, condo fees, existing loans, credit cards, lines of credit, support obligations, interest rates, and stress-test rules. Benchmarks commonly used in underwriting are about 39% GDS and 44% TDS.
Yes, condo fees can shrink affordability even when the purchase price fits your down payment plan. Lenders usually count at least part of the monthly condo fee in debt-service calculations, so two buyers with the same income and same down payment can qualify very differently for a freehold house and a condo. That matters in Toronto more than buyers expect.
A practical sequence works better than guesswork. Start with the target purchase price, calculate the minimum down payment, estimate whether the loan will be insured, then test the full monthly carrying cost against income and debts. After that, add closing costs Ontario buyers actually face. We see cleaner files when buyers do those four steps in that order.
Property type matters: owner-occupied homes, condos, undivided co-ownership, and rental properties
Yes, property type can change the minimum cash needed even when the standard federal formula is your starting point. Owner-occupied homes and standard condos are usually the simplest files, while undivided co-ownership, leasehold interests, and rental property down payment files can face narrower lender options and stricter terms.
No, condos do not have a separate legal minimum down payment formula just because they are condos. What changes is affordability because condo fees affect debt ratios, and the legal side often includes a status certificate review that can reveal arrears, special assessments, or bylaw issues. That is one reason condo purchases need early review.
Yes, undivided co-ownership files are harder. Fewer lenders finance them, some require larger down payments than they would for a standard condo, and the legal review is more intensive because ownership and financing structures differ from ordinary condominium title. I have seen financing die late on these files when buyers relied on a generic pre-approval.
Yes, rental and investment properties can require more equity than a comparable owner-occupied home. The exact minimum depends on occupancy, unit count, insurer rules, and lender policy, so get current advice before you make an offer on a non-owner-occupied property. Rules for special property types move faster than buyers think.
| Property type | Usual starting point | What often changes the result |
|---|---|---|
| Owner-occupied freehold home | Standard federal minimum framework applies | Income, debts, credit, appraisal, closing costs |
| Standard condo | Standard federal minimum framework usually applies | Condo fees, status certificate issues, lender policy |
| Undivided co-ownership | Lender availability is narrower | Larger down payment requests, legal structure, lender choice |
| Rental or investment property | Occupancy can change lender and insurer treatment | More equity, different underwriting, rental income treatment |
| Leasehold or other special cases | Case-by-case lender approach | Marketability, remaining term, legal review |
What sources of down payment funds are usually accepted
Yes, traditional down payment sources are usually the easiest to document. Personal savings, funds held in a chequing or savings account, TFSA withdrawals, and sale proceeds from another property usually fit this category if the paper trail is clear. Lenders like clean statements.
Yes, non-traditional down payment sources can still work, but they draw more scrutiny. Gifted down payment funds, borrowed down payment structures, and irregular lump sums usually require more documents and can limit lender options. The issue is rarely just whether the money exists. The issue is whether the lender will accept the source.
No, not every lender accepts every source on the same terms. One lender may be comfortable with a family gift and another may want tighter proof of transfer, a signed gift letter, or extra statements. We also may need source-of-funds documents for anti-fraud and law-society compliance reasons before we disburse closing money.
| Source of funds | Usually accepted? | Common documents | Main caution point |
|---|---|---|---|
| Personal savings | Usually yes | 90 days of statements | Large unexplained deposits can cause questions |
| TFSA | Usually yes | Account statement and withdrawal proof | Market volatility before withdrawal |
| FHSA | Usually yes if eligible | Account records and withdrawal proof | Must meet current CRA rules |
| RRSP Home Buyers’ Plan | Usually yes if eligible | RRSP withdrawal records | Timing and repayment rules apply |
| Sale proceeds | Usually yes | Sale statement of adjustments, bank proof | Timing between closings matters |
| Gifted down payment | Often yes | Gift letter, transfer proof, bank statements | Lender-specific conditions |
| Borrowed funds | Sometimes | Loan documents, statements | Hurts affordability and approval |
Using the FHSA for a down payment
Yes, the FHSA can be a strong tool for first-time buyers building a down payment. It is designed to let eligible buyers contribute, claim tax deductions like an RRSP contribution, and withdraw for a qualifying first home purchase on a tax-free basis if the rules are met. That combination is why it gets attention.
Yes, current FHSA limits are commonly described as up to $8,000 per year and $40,000 lifetime. Those figures are accuracy-sensitive, so confirm current CRA rules before you rely on them for a firm purchase timeline.
Yes, buyers often combine FHSA savings with other sources. I regularly see a down payment built from FHSA funds, TFSA cash, ordinary savings, and a small gift or RRSP withdrawal. The legal issue is not the label on the account. The issue is having the money available and documented before closing.
Using the RRSP Home Buyers’ Plan
Yes, the RRSP Home Buyers’ Plan can also help fund a first home purchase if you meet the eligibility rules. It lets qualifying buyers withdraw RRSP funds without immediate tax on the withdrawal, as long as the program rules are met and repayments are made over time.
Yes, a commonly cited current withdrawal limit is up to $60,000 per person, with a couple potentially reaching $120,000 if both are eligible. These limits have changed over time, so verify the current CRA amount before you plan around it.
Yes, timing matters with RRSP funds. A commonly cited rule is that contributed funds may need to stay in the RRSP for at least 90 days before withdrawal under the plan. If buyers miss this timing, the expected money may not be available when the deal goes firm.
Yes, repayment matters too. A commonly cited repayment period is 15 years, with required annual repayments starting after the allowed grace period under current CRA rules. This is not free money. It is a tax-advantaged withdrawal with strings attached.
Yes, you can often use the FHSA and RRSP Home Buyers’ Plan together if you qualify for both. That combination can materially increase available down payment funds, but each plan has separate eligibility and timing rules. Confirm both before you sign a short-closing purchase.
Can gifted money be used for a down payment?
Yes, a family gift can often be used as a gifted down payment if the lender and, where applicable, insurer accept it. The central rule is usually that the funds must be a genuine gift, not a hidden repayable loan. Buyers get into trouble when the paperwork says one thing and the real arrangement says another.
No, there is no universal 90-day seasoning rule for every gifted down payment file. Some lenders want the money in the account well before approval, some focus more on the transfer trail and signed gift letter, and others impose stricter conditions if the overall file is thin. Treat 90 days as a common document benchmark, not a universal law.
Yes, the paperwork is what makes gifted funds usable. A lender may ask for a signed gift letter, proof of the donor’s transfer, recent bank statements, identification from the donor in some cases, and confirmation that the funds do not need to be repaid. We may also need to review source-of-funds records before closing.
Gifted down payment documentation checklist
- Signed gift letter stating the money is a gift, not a loan.
- Proof of transfer from donor to buyer.
- Buyer bank statements showing receipt of funds.
- Donor identification if requested by the lender.
- Any lender form confirming the relationship and non-repayment terms.
- Enough time before closing to satisfy lender review.
I have seen gifted-fund files stall 3 to 7 days before closing because the transfer happened too late or the gift letter wording did not match the lender’s instructions. That is avoidable.
Can you borrow the down payment or buy with no down payment?
No, true no down payment mortgage options are not the standard route for most buyers in Canada today. If you cannot meet the minimum down payment, the ordinary answer is that you are not ready to buy yet under standard lending rules.
Yes, borrowed down payment structures sometimes exist, but they are harder files. The borrowed money increases your debt load, worsens GDS and TDS, and can eliminate the approval you were trying to save. I tell buyers not to assume borrowed funds solve a cash problem. They often just move it.
No, I would not build a purchase plan around an unverified lender product or an old article about no-down-payment mortgages. Lender products change fast, and the wrong assumption can cost you a deposit if you go firm too early.
Closing costs, reserves, and the total cash you need beyond the down payment
Yes, you need more than the minimum down payment to buy safely in Ontario. A workable buyer budget usually includes the deposit, the rest of the down payment, land transfer tax, legal fees and disbursements, title insurance, adjustments, and a reserve for moving or setup costs. The down payment is only one line item.
Yes, a practical closing-cost range for Ontario buyers is often about 1.5% to 4% of the purchase price, excluding the down payment, depending on whether land transfer tax is heavy, whether the property is in Toronto, whether it is a new build, and whether lender charges or builder adjustments apply. New builds can blow past a buyer’s first estimate because builder adjustments are real money.
No, legal fees are not the only legal cost on closing. Disbursements are the out-of-pocket charges we pay to close and register the file, and title insurance is a separate premium commonly required by lenders and useful for many buyers. Those are ordinary closing items, not extras invented at the last minute.
Yes, I tell clients to keep a reserve and not use every dollar for the minimum down payment. A buffer of at least a few thousand dollars is often the difference between a clean closing and a last-minute scramble when adjustments, lender conditions, or moving costs come in higher than expected.
Closing-cost reminder box
The minimum down payment is not your total cash needed. Ontario buyers should separately budget for land transfer tax, legal fees, disbursements, title insurance, adjustments, and a reserve. In Toronto, the municipal land transfer tax can be a major extra cost.
Should you wait for 20% down or buy sooner with less?
No, waiting for 20% is not always the smart move. If home prices are rising faster than your savings, buying sooner with less than 20% down can beat waiting, even after mortgage default insurance costs are added. The opposite can also be true if your budget is tight or your emergency savings are thin.
Yes, the real comparison is monthly affordability, not pride in hitting a round number. A 20% down payment removes mortgage insurance and lowers borrowing costs, but it can take years longer to save. A smaller down payment gets you into the market sooner, but with a higher payment and insurance premium. That is the trade.
A good decision framework uses six factors. Compare your target area price trend, your monthly carrying comfort, your job stability over the next 12 to 24 months, your emergency fund, your expected time in the property, and your readiness for Ontario closing costs. If two or three of those factors are weak, waiting may be the better call.
If you cannot meet the minimum down payment yet
No, you generally cannot buy a home with no down payment through standard channels if you do not meet the minimum rules. The better move is usually to lower the target price, build savings, reduce debt, or revisit the plan after a stronger pre-approval.
Yes, a few practical steps can shorten the timeline. Use the FHSA if you qualify, automate monthly savings, avoid new debt, review family gift options carefully, and keep your bank statements clean for at least 90 days before application where possible. Buyers who do this early usually have easier financing files.
No, making an offer before you know your full cash requirements is not harmless. If you cannot close, you risk losing the deposit and facing a claim for damages if the seller resells for less. I have handled those files. They are expensive and completely avoidable.
Buyer checklist before you make an offer
Yes, a pre-offer checklist will catch most avoidable problems. In my experience, easily 9 in 10 buyer files close clean when the cash, mortgage, and legal review are lined up before the offer goes firm. The messy files are almost always rushed.
Buyer checklist
- Confirm the minimum down payment for your target price.
- Confirm where the funds are coming from.
- Gather recent bank statements and account records.
- Confirm the deposit amount and when it is due.
- Estimate closing costs Ontario buyers actually pay.
- Prepare gift documents if any funds are coming from family.
- Check how condo fees, taxes, and debts affect GDS and TDS.
- Ask the lender or broker about mortgage loan insurance if under 20% down.
- Retain a real estate lawyer early to review the deal and closing process.
Yes, early legal review can catch problems before they cost real money. We review the agreement, flag title issues, explain adjustments, confirm closing funds, and coordinate with the lender before money is wired and documents are registered. That is the practical step once you know your likely deposit and down payment.
FAQ
What is required for a down payment?
A down payment requires available funds from an acceptable source and proof of that source. Common sources include savings, TFSA funds, FHSA withdrawals, RRSP Home Buyers’ Plan withdrawals, sale proceeds, and some family gifts.
What are the rules for down payment on a mortgage?
The common federal framework is 5% on the first $500,000, 10% on the portion above $500,000 up to $1,499,999, and 20% at $1,500,000 or more. Lender, insurer, occupancy, and property-type rules can still affect the file.
How much of a down payment do I need for a $500,000 home in Canada?
The minimum is $25,000.
How much of a down payment do I need for a $300,000 house?
The minimum is $15,000.
Does Ontario have different down payment requirements?
Usually no for standard purchases. Ontario mostly follows the same federal minimum framework, but Ontario closing costs can be materially higher.
Is a deposit the same as a down payment?
No. A deposit is paid early under the agreement, and the down payment is your total upfront contribution. The deposit usually counts toward the down payment.
Do I need mortgage insurance if I put less than 20% down?
Usually yes. Mortgages with less than 20% down are generally high-ratio and require mortgage default insurance.
Can a family gift be used as a down payment?
Yes, often. The lender usually wants a gift letter, proof of transfer, and confirmation that the money is not a repayable loan.
Can I use the FHSA and RRSP Home Buyers’ Plan together?
Yes, often, if you qualify for both. Each program has separate eligibility and timing rules.
What closing costs should I budget for besides the down payment?
Budget for land transfer tax, legal fees, disbursements, title insurance, adjustments, lender charges where applicable, and a reserve. A practical Ontario range is often about 1.5% to 4% of the price, excluding the down payment.
Can I buy a home with no down payment?
Usually no through standard lending channels. Borrowed-fund structures sometimes exist, but they are harder to qualify for and can worsen affordability.
Should I wait until I have 20% down?
Not always. Compare the cost of waiting with the cost of buying sooner with mortgage insurance, and make sure your monthly budget and reserve fund are still strong.
If you are close on the numbers, the next step is simple. Get your mortgage side updated, pin down your deposit, and have the deal reviewed before you make it firm. That is where a buyer-side real estate lawyer can stop small cash issues from becoming closing failures.