Video: Minimum Down Payment Guidelines

Minimum Down Payment: How Much You Need to Unlock Your Dream Home!

When purchasing a home, your total purchase price will be covered by a combination of your down payment and your mortgage. Your down payment is the amount of money you have available to put towards the home upfront. Understanding the minimum down payment required based on your purchase price is essential for planning your home-buying budget.

Minimum Down Payment Requirements in Canada

The general rules for minimum down payments are as follows:

For a purchase price up to $500,000 → Minimum down payment: 5%
For the portion of your purchase price between $500,000 and $1,499,999 → Minimum down payment: 10% (a new change imposed as of December 2024).
For properties priced at $1,500,000 or above → Minimum down payment: 20% of the total price (no tiered structure at this level)

Minimum Down Payment Examples

To clarify how these percentages apply, here are some example purchase prices and their corresponding minimum down payments:

$500,000 → $25,000 (5%)
$750,000 → $50,000 (5% of $500,000 + 10% of $250,000)
$1,000,000 → $75,000 (5% of $500,000 + 10% of $500,000)
$1,250,000 → $100,000 (5% of $500,000 + 10% of $750,000)
$1,499,999 → $125,000 (5% of $500,000 + 10% of $999,999)
$1,500,000 → $300,000 (20% of the full price)

As you can see, reaching the $1,500,000 price point significantly increases the required minimum down payment because the tiered system no longer applies.

There are a few other costs associated with buying a home in Ontario. Watch these videos next to get a full look:

Who Can Benefit from the Tiered Minimum Down Payment System?

A common misconception is that the ability to put down less than 20% is exclusive to first-time home buyers, but this is not the case. Any homebuyer purchasing their primary residence can take advantage of this tiered down payment system.

However, if you are purchasing an investment property, a minimum of 20% down is required, regardless of the purchase price.

What’s the difference between a deposit and a down payment? Watch this video to find out.

Mortgage Default Insurance: What You Need to Know

If you’re buying a home for less than $1,500,000 and your down payment is less than 20%, you are required to purchase mortgage default insurance. This insurance protects the lender in case of loan default since your mortgage is considered a high-ratio mortgage.

The cost of mortgage default insurance ranges between 2.8% – 4% of the mortgage amount and is added to your mortgage, increasing the overall loan balance.

Final Thoughts

Now that you have a clearer understanding of the minimum down payment requirements, you can better prepare for your home purchase. Whether you’re a first-time buyer or a seasoned homeowner, knowing these financial details will help you plan effectively and make informed decisions on your journey to homeownership.