If you’re buying your first home in Ontario, the down payment question is one of the first things you’ll face. The rules seem straightforward: 5% down on homes under $500K, 10% on the portion between $500K and $999K, and 20% on anything over $1M. But in practice — especially in the GTA where average detached homes sit above $1.1M — those rules get complicated quickly.
The 5% Rule: What It Actually Means
For a $750,000 home, you’d need a minimum of $37,500 (5% of the first $500K, plus 10% of the remaining $250K = $25,000 + $25,000… wait, let’s recalculate). Actually, it’s: 5% × $500,000 = $25,000, plus 10% × $250,000 = $25,000. Total minimum: $50,000.
CMHC Mortgage Insurance
If your down payment is under 20%, you’ll pay CMHC mortgage insurance — a premium of 2.8% to 4% of your mortgage amount, added to your loan. On a $750K home with 10% down ($75K), your insured mortgage is $675K, and your CMHC premium is $675K × 3.1% = approximately $20,925 — rolled into your mortgage.
The Real Number for GTA Buyers
For most GTA buyers targeting the $900K–$1.2M range, a realistic down payment target is $180,000–$240,000 (20%). This avoids CMHC insurance and is increasingly the standard for buyers in competitive markets. First-time buyers using the FHSA (First Home Savings Account) and HBP (Home Buyers’ Plan) can accelerate this savings significantly.
Don’t Forget Closing Costs
Beyond your down payment, budget an additional 2–4% of the purchase price for closing costs: Ontario land transfer tax, Toronto land transfer tax (if buying in the city), legal fees, home inspection, title insurance, and moving costs. On a $900K home, that’s roughly $18,000–$36,000 in additional cash required.