Down Payment Rules in Ontario: What Every Home Buyer Should Know
If you are reviewing down payment rules in Ontario, clarity matters. Across the Greater Toronto Area, the same question appears repeatedly.
Is twenty percent required?
In most cases, it is not.
Under current federal guidelines, properties priced below $1.5 million may qualify with less than twenty percent down payment, subject to mortgage default insurance requirements. As a result, understanding the updated thresholds prevents unnecessary over-saving.
Let us break this down clearly.
How Down Payment Rules in Ontario Work
Currently, Canada uses a tiered minimum down payment system. This structure applies to all buyers, not only first-time purchasers.
Here is how the percentages apply:
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Five percent on the first $500,000
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Ten percent on the portion between $500,000 and $1,499,999
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Twenty percent minimum at $1.5 million or more
The $1.5 Million Threshold in Ontario
Previously, insured mortgages were capped at $1.0 million. However, the federal limit increased to $1.5 million. Consequently, more properties in the GTA now qualify for insured financing.
To illustrate:
Purchase price: $900,000
Five percent of $500,000 equals $25,000.
Ten percent of $400,000 equals $40,000.
Total minimum down payment equals $65,000.
Now compare that with a $1,500,000 purchase.
Minimum down payment equals $300,000.
Clearly, the threshold creates a significant capital shift. Therefore, purchase price strategy directly affects required liquidity.
Real GTA Math Examples
Example 1: $800,000 purchase
5% of $500,000 = $25,000
10% of $300,000 = $30,000
Minimum down payment = $55,000
Example 2: $1,200,000 purchase
5% of $500,000 = $25,000
10% of $700,000 = $70,000
Minimum down payment = $95,000
This example is exactly why the $1.5M cap matters in the GTA. A buyer no longer needs $240,000 down simply because the price is above $1.0M.
Example 3: $1,499,999 purchase
5% of $500,000 = $25,000
10% of $999,999 = $99,999.90
Minimum down payment = $124,999.90
Example 4: $1,500,000 purchase
Minimum down payment = $300,000
Mortgage default insurance not available.
Buying With Less Than Twenty Percent
A down payment below twenty percent triggers mortgage default insurance. In this structure, the insurance premium is added to the mortgage balance.
Although insurance introduces additional cost, insured mortgages often receive competitive interest rates due to reduced lender exposure. Consequently, insured status should not be viewed negatively without analysis.
For a deeper structural comparison, see Insured vs Uninsured Mortgage in Ontario.
Aligning Down Payment With Qualification
Minimum capital represents only one component of approval. Qualification criteria remain separate.
Income stability, debt ratios, credit profile, stress test requirements all influence borrowing power.
Because of this, savings plans must align with qualification strength. Before transferring funds between accounts, review the Mortgage Pre-Approval Process in Ontario. to ensure timelines remain aligned.
For first-time buyers structuring registered accounts, see First Time Buyer Down Payment in Ontario for a strategic breakdown.
Common Misunderstandings
Many buyers assume twenty percent is mandatory.
Some believe the older $1.0 million cap still applies.
Others move funds too close to closing.
Each mistake creates friction.
Clarity prevents delay.
Final Thought
Down payment rules in Ontario follow a clear framework.
The insured threshold now reaches $1.5 million.
Knowing the tiers protects your capital strategy.
Clarity reduces stress. Structure builds control. Planning strengthens every offer.
Mortgage Strategy in Your Pocket
Planning does not stop after reading one article.
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Tracey Brock * 416.788.6207 * TBrock@DominionLending.ca * DLC Expert Financial 12129 * Independently o/o
