Down payment questions are the most common ones we get, and the answers change at two specific price thresholds.
The three price bands
Under $500,000 the minimum is 5% of the purchase price. From $500,000 to $1,500,000 it is 5% on the first $500,000 plus 10% on the portion above. Above $1,500,000 lenders require 20% down and default insurance is unavailable.
Default insurance is added, not paid upfront
With less than 20% down, mortgage default insurance is required. The premium is usually added to your mortgage balance rather than paid on closing, though provincial sales tax on the premium is payable at closing in Ontario.
Closing costs to budget separately
Beyond the down payment, plan for:
- Land transfer tax (plus municipal land transfer tax in Toronto)
- Legal fees and disbursements
- Title insurance
- Home inspection and, occasionally, an appraisal
- Property tax and utility adjustments
Where the down payment can come from
Savings, an FHSA, an RRSP withdrawal under the Home Buyers' Plan, the sale of another property, or a documented gift from an immediate family member. Lenders require a 90-day history for savings, so moving money between accounts right before closing creates avoidable delays.
Budget the down payment and roughly 1.5%–4% of the purchase price for closing costs, then confirm the exact figures before you write an offer.
Want this applied to your own numbers?
Call Phil Cragg at 866-349-4915 or request a written comparison.
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