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Minimum Down Payment Requirements for Buying a House in Ontario
If you’re planning to buy a home in Ontario, one of the most important financial considerations is the down payment. Since the minimum down payment required depends on the purchase price of the home, understanding these requirements can help you plan your budget effectively and determine how much you need to save before making your purchase.
Updated Minimum Down Payment Rules in Ontario (Effective December 15, 2024)
Recently, the Canadian government has updated mortgage rules, increasing the cap on insured mortgages to $1.5 million. As a result, homes priced up to $1.5 million can now qualify for a minimum down payment of less than 20%. To better understand how this affects you, let’s break down the new requirements:
- For homes priced at $500,000 or less: A minimum down payment of 5% of the purchase price is required.
- For homes priced between $500,000 and $999,999: You must pay 5% on the first $500,000, followed by 10% on the portion of the price above $500,000.
- For homes priced between $1 million and $1.5 million: A minimum down payment of 10% on the portion above $500,000 is required.
- For homes priced above $1.5 million: A minimum down payment of 20% is required.
Additionally, if your down payment is less than 20%, you must obtain mortgage default insurance, commonly known as CMHC insurance. This coverage protects lenders in case you default on your loan, making it an essential factor to consider when planning your home purchase.
Down Payment Breakdown by Home Price
To illustrate this more clearly, here’s a chart that outlines the minimum down payment required for various home price ranges:
| Home Price | Minimum Down Payment Required |
|---|---|
| $400,000 | (5%) |
| $500,000 | (5%) |
| $600,000 | (5% on first $500K + 10% on next $100K) |
| $700,000 | (5% on first $500K + 10% on next $200K) |
| $800,000 | (5% on first $500K + 10% on next $300K) |
| $900,000 | (5% on first $500K + 10% on next $400K) |
| $1,000,000 | (5% on first $500K + 10% on next $500K) |
| $1,200,000 | (5% on first $500K + 10% on next $700K) |
| $1,500,000 | (5% on first $500K + 10% on next $1M) |
| $1,500,000 + | (20%) |
Key Takeaways
Now that you have a clearer understanding of the down payment requirements, here are some important points to keep in mind:
- In Ontario, the minimum down payment starts at 5% for homes under $500,000.
- When purchasing a property between $500,000 and $1.5 million, the requirement follows a tiered structure, reducing the initial burden on buyers.
- If you’re considering a home priced above $1.5 million, expect to provide a minimum down payment of 20%.
- Keep in mind that if your down payment is less than 20%, mortgage default insurance is mandatory.
Final Thoughts
Purchasing a home is a significant financial milestone, and understanding the down payment requirements can make the process smoother. By planning ahead, you ensure that you have the necessary funds ready, minimizing financial stress. Whether you’re a first-time homebuyer or looking to upgrade, knowing these details will help you navigate the real estate market with confidence.
If you’re thinking about purchasing a home in Ontario and need guidance on financing options, I’m here to help! Feel free to reach out for expert advice and personalized assistance.
For more detailed information, you can refer to the official announcement by the Department of Finance Canada: canada.ca
Mellinda Thaxter
📞 647-289-9765
📍 Century 21 Leading Edge Realty, Mississauga, ON
🌐 mellinda-thaxter.c21.ca
📧 mellinda.thaxter@century21.ca
🏡 Helping You Buy, Sell & Invest in Ontario Real Estate
