Down Payment 101: How Much You Need (and How to Save) for Your First Home in Ontario (2026 Guide)

Buying your first home is exciting — but the down payment is often the biggest hurdle. With updated Canadian mortgage rules now in effect, many Ontario buyers are unsure how much they actually need and how to save for it.

This guide explains everything in simple terms, using real Ontario price examples and the latest down payment rules for 2026.

What Is a Down Payment?

A down payment is the upfront amount you pay toward the purchase price of your home. The remaining balance is financed through a mortgage.

Your down payment affects:

• Mortgage approval
• Whether mortgage insurance is required
• Monthly payments
• Long-term interest costs

Canada’s Down Payment Rules (2026 Update)

Homes Under $500,000

• Minimum down payment: 5%

Homes Between $500,000 and $1.5 Million

• 5% on the first $500,000
• 10% on the portion above $500,000 up to $1.5M

Homes Over $1.5 Million (Important Rule)

• 20% down payment is required on the portion above $1.5M

This rule applies to all buyers, including first-time homebuyers.

Ontario Down Payment Examples

Example 1: $750,000 Purchase

• 5% of $500,000 = $25,000
• 10% of $250,000 = $25,000
  Total down payment: $50,000

Example 2: $1,200,000 Purchase

• 5% of $500,000 = $25,000
• 10% of $700,000 = $70,000
  Total down payment: $95,000

Example 3: $1,700,000 Purchase (20% Rule Applies)

• 5% of $500,000 = $25,000
• 10% of $1,000,000 = $100,000
• 20% of $200,000 (amount over $1.5M) = $40,000
  Total down payment: $165,000

This is where many buyers underestimate what’s required — planning early is critical.

Do You Need 20% Down to Buy a Home?

No — unless the purchase price exceeds $1.5M.

If your down payment is less than 20%, mortgage default insurance is required (CMHC, Sagen, or Canada Guaranty). While it adds to your loan, it allows buyers to enter the market sooner.

Many first-time buyers in Ontario purchase with 5–10% down successfully.

Best Ways to Save for a Down Payment

1. First Home Savings Account (FHSA)

• Up to $40,000 per person
• Contributions are tax-deductible
• Withdrawals for a first home are tax-free

Couples can save up to $80,000 using FHSAs.

2. RRSP Home Buyers’ Plan (HBP)

• Withdraw up to $35,000 per person
• Must be repaid over time
• Can be combined with FHSA savings

3. Family Gifts

• Parents or immediate family can gift funds
• Requires a signed gift letter
• Funds must not be repayable

4. Using Existing Home Equity

• Refinance or HELOC strategies
• Common for move-up buyers
• Requires careful lender structuring

Final Thoughts

Down payment rules have changed — but homeownership in Ontario is still achievable with the right plan.

Understanding the rules, using the right savings tools, and structuring your mortgage properly can make the difference between waiting years and buying sooner.

Thinking of Buying Your First Home in Ontario?

I help first-time buyers across Bradford, Barrie, Pickering, Oshawa, Vaughan, and the GTA create a clear, realistic mortgage plan before they shop.

👉 Book a free mortgage strategy call and let’s map out your next move.

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