Down Payment Guide for Ontario Home Buyers in 2026

Minimum Down Payment Rules in Canada

The federal government sets the minimum down payment for owner-occupied homes based on the purchase price. The same rules apply in Ontario and in the rest of Canada.

The limit on insured purchase prices rose from $1,000,000 to $1,500,000 on December 15, 2024.1 This means a purchase between $1,000,000 and $1,499,999 can qualify for mortgage insurance with the same tiered down payment as the table above: 5% on the first $500,000 plus 10% on the remaining price, rather than the 20% required at $1,500,000 and above.

CMHC Mortgage Default Insurance

When your down payment is less than 20%, you must buy mortgage default insurance. This insurance protects the lender, not you, if you default on the mortgage. CMHC (Canada Mortgage and Housing Corporation) is one of the approved insurers.2

Insurance Premium Rates

These rates are for a 25-year amortization. An amortization longer than 25 years adds a surcharge of 0.20% to the premium.2

The premium is usually added to your mortgage balance, so you do not pay it out of pocket. However, it increases the total amount you borrow, and therefore your monthly payments and total interest over the life of the mortgage. In Ontario, provincial sales tax applies to the premium. That tax cannot be added to the loan, so you pay it separately.2

Is It Worth Putting Down More to Avoid Insurance?

This is a common question, and the answer depends on your numbers. If you have 15% available and are considering whether to save to 20%, the insurance premium at 15% down is 2.80% of the mortgage amount. On a $500,000 home, that is $11,900. Whether it makes sense to wait depends on how quickly you can save the additional 5%, what home prices are doing in the meantime, and what the opportunity cost is of tying up the extra cash in a down payment rather than investing it elsewhere.

Down Payment Examples at Ontario Price Points

Ontario's housing market spans a wide range of price points. The examples below are illustrative. They use a 25-year amortization and leave out Ontario sales tax on the premium and any land transfer tax refund.

Acceptable Down Payment Sources

Lenders need to know where your down payment comes from. The source must be documented, and each lender sets its own documentation rules.

Commonly Used Sources

• Personal savings: Money you have saved in your own accounts. Your lender will ask for statements showing where the money came from.
• RRSP withdrawals (Home Buyers' Plan): Up to $60,000 per person for eligible first-time buyers. See the section below.6
• FHSA withdrawals: Qualifying withdrawals from a First Home Savings Account for eligible first-time buyers.5
• TFSA funds: Savings held in a Tax-Free Savings Account, documented like other savings.
• Proceeds from the sale of another property: Documented through the sale agreement and your lender's documents showing the proceeds.

Accepted with Documentation

• Gifts from family: Usually requires a signed gift letter (see below).
• Other funds: Lump-sum payments such as insurance or settlement proceeds can be used, but the lender will need documents showing where they came from.

Restricted or Limited

• Borrowed funds: Whether borrowed money can be part of a down payment depends on the mortgage program and the lender. Ask before you borrow.
• Gifts from outside the family: Lenders may limit gifts to immediate family members. Ask your lender first.
• Cryptocurrency: Lenders may require funds to be converted to Canadian dollars and held in a bank account, with a clear paper trail, before they count toward a down payment.

Gifted Down Payments

A gift from a family member is one way to add to a down payment. Each lender sets the rules, so check them early to avoid delays during the mortgage process.

Gift Letter Requirements

Lenders usually ask for a signed gift letter. Ask your lender what it must include, including whether it needs the gifter's and the recipient's signatures and dates.

Additional Requirements

• Source of funds: Some lenders want to see where the gifter's money came from.
• Timing: Some lenders want the gift deposited in your account before closing. The time limit varies by lender.
• Transfer method: Some lenders have rules about how the gift is transferred. Ask yours.

If you plan to use a gifted down payment, discuss the specific lender requirements with your mortgage broker early in the process so the gifter has time to prepare.

Government Programs That Help

Several government programs can help you save for a down payment or reduce the cost of buying a home in Ontario. Rules change, so confirm the current details with the government source for each program.

First Home Savings Account (FHSA)

• Annual contribution limit: $8,0005
• Lifetime contribution limit: $40,0005
• Eligibility: You meet the CRA's first-time buyer definition. In general, you did not live in a home you owned or jointly owned, or that your spouse or common-law partner owned, as your principal residence in the current calendar year or the four years before it.5
• Taxes: The CRA sets out how contributions and withdrawals are taxed. Check its FHSA pages or ask a tax professional.

Home Buyers' Plan (HBP)

• Maximum withdrawal: $60,000 per person6
• Repayment: Repaid to your RRSP over 15 years. For a first withdrawal made from 2026 to 2028, repayment starts in the fifth year after the year of withdrawal. For example, a first withdrawal in 2026 starts repayment in 2031.67
• Eligibility: You must meet the CRA's first-time buyer rules. See our first-time buyer guide.

Ontario Land Transfer Tax Refund

• Maximum refund: $4,000 for eligible first-time buyers3
• How it works: Eligible first-time buyers pay no land transfer tax on the first $368,000 of the purchase price, and the refund is capped at $4,000.3
• Conditions: You must be at least 18, a Canadian citizen or permanent resident, and occupy the home as your principal residence within nine months. You and your spouse must never have owned a home anywhere in the world. Apply within 18 months of the transfer.3
• Toronto buyers: The City of Toronto offers a separate first-time purchase rebate of up to $4,475, with its own conditions.4
• Combined: A qualifying first-time buyer in Toronto may receive up to $8,475 across the two refunds, if they qualify for both.

The land transfer tax refund is not a down payment program, but it reduces your closing costs, which can leave more of your savings for the down payment. For more on first-time buyer programs, see our first-time buyer guide.

How Private Lenders Handle Down Payments

Private lenders operate under different rules than banks. If you are considering a private mortgage for a purchase, the down payment picture is different in several ways.

Key Differences

• No CMHC insurance: Private mortgages are generally not insured through CMHC, so the insurance premium rules above do not apply.
• Lender-set down payments: Private lenders set their own down payment requirements. These are often higher than bank requirements and vary from lender to lender.
• Source of funds: Each private lender sets its own rules on where down payment funds can come from. Ask each lender.
• Equity is the focus: Private lenders look closely at the equity in the property. Whether the equity comes from a down payment or from existing home equity (in a refinance), the lender's test is the same.

When a Private Purchase Mortgage Makes Sense

A private mortgage for a purchase is sometimes used when a buyer cannot qualify with a bank or B-lender, for example because of credit issues or income documentation challenges. Private lenders set the down payment and other terms. A private mortgage should include a clear exit strategy for moving to conventional financing later. Speak with a licensed professional before you decide.

The down payment is part of the foundation of your home purchase. A larger down payment usually means a smaller mortgage and more lender options. Whether to save longer or buy now is a personal decision that depends on your finances and your plans. Check your numbers with a licensed professional before you decide.