Down Payment Guide for Buying a Home in Ontario

By Andrea Jolly | Mortgage Broker

How Much Down Payment Do You Need to Buy a Home in Ontario?

One of the first questions many homebuyers ask is how much money they need for a down payment. Understanding down payment requirements can help you plan your home purchase and determine what price range may be realistic.

In Ontario and across Canada, mortgage rules set minimum down payment amounts based on the purchase price of the home.

Minimum Down Payment Requirements in Canada

For most home purchases in Canada, the minimum down payment depends on the price of the property.

Typical minimum requirements are:

• 5% on the first $500,000 of the purchase price

• 10% on the portion of the purchase price between $500,000 and $1,000,000

• 20% minimum for homes priced above $1,000,000

If your down payment is less than 20%, mortgage default insurance is typically required.

What Is Mortgage Default Insurance?

Mortgage default insurance protects the lender if a borrower is unable to repay the mortgage.

In Canada, insured mortgages are typically provided through organizations such as:

• Canada Mortgage and Housing Corporation

• Sagen

• Canada Guaranty

The insurance premium is usually added to the mortgage amount rather than paid upfront.

Acceptable Down Payment Sources

Lenders require proof that the down payment funds come from an acceptable source.

Common acceptable sources include:

Savings

Personal savings accumulated in bank accounts or investment accounts.

Gifted Down Payment

Funds provided by an immediate family member may be acceptable with a signed gift letter confirming the funds do not need to be repaid.

Sale of an Existing Property

Proceeds from selling another home can be used toward the down payment.

Registered Savings Plans

Funds from programs such as the Home Buyers’ Plan (HBP) may allow eligible buyers to withdraw from their RRSPs to help with a home purchase.

Borrowed Down Payment (Flex Down)

In some cases, buyers may be able to borrow funds for their down payment using a personal loan or line of credit. The borrower must still qualify for the mortgage while carrying the additional payment.

Down Payment Documentation

Lenders typically require documentation showing where the down payment funds came from.

This may include:

• recent bank statements

• investment account statements

• gift letters

• sale agreements from a previous property

In many cases, lenders will review 90 days of financial history to confirm the source of funds.

Tips for Saving for a Down Payment

Saving for a down payment can take time, but a few strategies may help make the process easier:

• set a dedicated savings goal

• automate monthly contributions to savings

• reduce high-interest debt

• explore available government programs for first-time buyers

Over time, consistent saving can help bring homeownership within reach.

Planning Your Home Purchase

Down payment requirements are just one part of preparing for a mortgage. Other factors such as income, credit history, and debt levels also play an important role in determining how much you may qualify to borrow.

If you’re planning to buy a home in Ontario, reviewing your financial situation with a mortgage professional can help you understand your options and create a clear plan for moving forward.