If you’re asking how much down payment in Ontario you need in 2026, you’re not alone. Federal regulations shifted in December 2024, and the tiered structure catches nearly every buyer off guard: especially those shopping in the $500,000 to $1.5 million range.
At BuyRealty.ca Brokerage, we’ve walked hundreds of clients through this exact calculation. The answer isn’t simple, but it’s completely navigable once you understand the three pricing brackets that govern Ontario’s residential market.
The Three-Tier Down Payment System
Canada operates under a federally mandated framework that segments buyers based on purchase price. Here’s the precise breakdown:
Tier 1: Homes $500,000 or Less
Minimum down payment: 5% of the purchase price
Tier 2: Homes $500,001 to $1,499,999
Minimum down payment: 5% on the first $500,000 + 10% on the remainder
Tier 3: Homes $1,500,000 and Above
Minimum down payment: 20% of the entire purchase price
That Tier 2 calculation is where most GTA buyers get caught. It’s not a flat percentage: it’s a hybrid formula that requires actual math, not guesswork.
Real-World Calculations
Let’s translate those tiers into tangible Ontario scenarios.
Example 1: A $425,000 Condo in Scarborough
5% × $425,000 = $21,250 minimum
Example 2: A $750,000 Freehold in Mississauga
(5% × $500,000) + (10% × $250,000) = $25,000 + $25,000 = $50,000 minimum
Example 3: A $1,800,000 Detached in Oakville
20% × $1,800,000 = $360,000 minimum
Notice how the jump from Tier 1 to Tier 2 doesn’t simply add 5%. On a $750,000 home, you’re actually putting down 6.67% of the total price: not 5%, not 10%, but a blended rate. This trips up even experienced buyers who assume flat percentages across all price points.
Mortgage Default Insurance: The Hidden Layer
Here’s the regulatory reality: if your down payment is less than 20%, you will be required to purchase mortgage default insurance. This isn’t optional: it’s a condition enforced by federally regulated lenders under the Bank Act and administered by the Canada Mortgage and Housing Corporation (CMHC), Sagen, or Canada Guaranty.
What does this mean financially?
Mortgage default insurance premiums range from 0.6% to 4.5% of your mortgage amount, depending on your loan-to-value ratio. The premium is typically added directly to your mortgage principal, meaning you’ll pay interest on it over the life of your loan.
For that $750,000 Mississauga home with a $50,000 down payment:
- Mortgage amount: $700,000
- Insurance premium (approximate): 3.10% = $21,700
- New mortgage balance: $721,700
That insurance cost is not a closing expense you pay out-of-pocket: it’s capitalized into your debt. Over a 25-year amortization at 5.5%, that $21,700 adds roughly $130/month to your payment.
The 20% Threshold
Once you cross the 20% down payment mark, mortgage default insurance is no longer required. This is why many strategic buyers target that threshold: not just to avoid the premium, but to unlock better rate negotiations and eliminate the insurance drag on their monthly cash flow.
For properties above $1.5 million, the 20% mandate serves a dual purpose: it removes default insurance entirely while ensuring buyers have substantial equity from day one.
Strategic Financial Planning: Beyond the Minimum
At BuyRealty.ca Brokerage, we advise clients to think beyond “What’s the minimum I can scrape together?” and shift to “What down payment optimizes my long-term position?”
Consider These Strategic Factors:
1. Debt Servicing Ratios
Your Gross Debt Service (GDS) ratio cannot exceed 39% of your gross monthly income. Your Total Debt Service (TDS) ratio caps at 44%. A larger down payment reduces your mortgage principal, which directly improves these ratios and can qualify you for better terms.
2. Interest Rate Environment
In February 2026, we’re seeing variable rates hover around 5.2% and fixed rates between 5.4–5.9%. Every additional $10,000 in down payment saves approximately $55/month in carrying costs at a 5.5% rate over 25 years. Over the mortgage’s life, that’s $16,500 in interest saved.
3. Opportunity Cost
If you’re liquidating RRSPs or high-yield investments to maximize your down payment, calculate whether the mortgage interest saved exceeds the returns you’re sacrificing. Sometimes, a minimum down payment with conservative investing makes more financial sense than draining all liquid assets.
4. Future Portability
If you plan to upsize within 3–5 years, maintaining liquidity for renovation, maintenance, or the next down payment may outweigh the benefits of a maxed-out initial down payment.
Government Programs and Incentives
Ontario buyers have access to multiple federal and provincial mechanisms designed to reduce upfront capital requirements:
First-Time Home Buyer Incentive
This shared-equity program allows eligible first-time buyers to borrow 5% or 10% of the home’s purchase price from the Government of Canada. You repay this amount when you sell the property or within 25 years: whichever comes first.
Eligibility Requirements:
- Household income below $120,000
- Total borrowing (mortgage + incentive) cannot exceed 4× your household income
- Minimum 5% down payment from your own resources
Home Buyers’ Plan (HBP)
The HBP permits you to withdraw up to $60,000 from your RRSP tax-free to fund your down payment (increased from $35,000 in 2022). If you’re purchasing with a spouse or partner, you can collectively withdraw up to $120,000.
Repayment Terms:
You have 15 years to repay the withdrawn amount back into your RRSP, starting the second year after withdrawal. Miss a repayment, and that year’s amount gets added to your taxable income.
Ontario Land Transfer Tax Rebate
First-time buyers purchasing a home valued below $368,000 qualify for a full refund of provincial land transfer tax: up to $4,000. Homes priced above that threshold receive partial rebates on a sliding scale.
In Toronto, you’re also subject to municipal land transfer tax, but first-time buyers receive an equivalent rebate up to $4,475.
Strategic Note:
If you’re purchasing a $600,000 property, your combined provincial and Toronto municipal land transfer tax hits approximately $16,500. The rebates reduce this to roughly $8,000: still a significant closing cost to budget beyond your down payment.
Closing Costs: The Forgotten Line Item
Buyers fixate on down payment but overlook the 1.5–4% in closing costs that accompany every transaction:
- Legal fees: $1,500–$2,500
- Title insurance: $250–$400
- Home inspection: $450–$650
- Appraisal (if required): $300–$500
- Land transfer tax (net of rebates): $0–$20,000+
- Status certificate review (condos): $100–$150
- Adjustments (property tax, utilities): Variable
On a $750,000 purchase, realistic closing costs range from $15,000 to $25,000. If you’ve allocated every dollar to hit the minimum down payment, you’ll be scrambling for liquidity at the lawyer’s office.
The Professional Path Forward
Navigating how much down payment in Ontario you actually need isn’t a question answered by a percentage: it’s a question answered through comprehensive financial planning, regulatory awareness, and local market intelligence.
Cathy Dou, Real Estate Agent and Broker of Record at BuyRealty.ca Brokerage works directly with buyers to model various down payment scenarios against current mortgage rates, debt ratios, and long-term real estate goals. This isn’t about hitting a minimum threshold: it’s about structuring a sustainable, strategic entry into Ontario’s residential market.
Whether you’re targeting a turnkey investment in Richmond Hill or a freehold in Hamilton, clarity around capital requirements is the foundation of every protected transaction.
The regulations changed in December 2024. Your strategy should reflect that shift.
