The down payment is often the longest part of buying a home in the GTA — not because the rules are complicated, but because the target number moves depending on what you're buying and how much you're willing to pay in mortgage insurance. Understanding exactly how the minimum is calculated, what insurance it triggers, and where the money can come from puts you in a much better position to plan a realistic timeline.

How Canadian down payment minimums actually work

Down payment minimums in Canada are set on a sliding scale tied to the purchase price, not a flat percentage:

  • 5% on the first $500,000 of the purchase price
  • 10% on the portion between $500,000 and $999,999
  • 20% minimum on any home priced at $1,000,000 or more — CMHC insurance is not available above this threshold regardless of down payment size

This means a $700,000 home requires a minimum of $45,000 down: 5% of $500,000 ($25,000) plus 10% of $200,000 ($20,000). Not 5% of the full price, and not a flat $35,000 — the blended structure is frequently misunderstood and often underestimated by first-time buyers doing quick mental math.

Mortgage default insurance: what it costs and when it applies

Any mortgage with less than 20% down requires mortgage default insurance — provided by CMHC, Sagen, or Canada Guaranty. The premium is calculated as a percentage of the loan amount and added either to your mortgage or paid upfront at closing:

  • 5% to 9.99% down — 4.00% premium on the loan amount
  • 10% to 14.99% down — 3.10% premium
  • 15% to 19.99% down — 2.80% premium
  • 20% or more — no insurance required, no premium

On a $700,000 purchase with the minimum $45,000 down, your insured loan of $655,000 carries a 4% premium — $26,200 — which is typically rolled into the mortgage rather than paid at closing. Your actual mortgage becomes $681,200. That premium is a real cost of putting less down, not just a formality, and it compounds over the full amortization period at whatever rate you're paying.

The 20% threshold: when it actually makes sense

Saving to 20% eliminates the insurance premium entirely and typically secures slightly better rates from some lenders, but it also means a longer savings timeline. For a $750,000 GTA property, the difference between 5% ($48,750) and 20% ($150,000) down is $101,250 — that's several years of additional saving for most buyers. Whether that delay makes sense depends on how quickly prices are appreciating versus how quickly you can save.

A useful comparison: the 4% CMHC premium on a $700,000 purchase adds $26,200 to the mortgage. Financed over a 25-year amortization at 5%, that premium costs roughly $45,000 in total interest. If local home prices rise by even 2–3% per year, a buyer who entered the market sooner with 5% down may come out ahead despite paying the premium — but that analysis depends heavily on the specific market conditions and how long they hold the property.

Where the down payment can come from

Lenders have specific rules about the source of down payment funds:

  • Personal savings — the simplest source; lenders want to see 90 days of account history showing the funds accumulating (not appearing as a lump sum)
  • FHSA (First Home Savings Account) — contributions are tax-deductible and growth is tax-free; withdrawals for a qualifying first home purchase are also tax-free, making this the most efficient savings vehicle for first-time buyers
  • RRSP Home Buyers' Plan (HBP) — first-time buyers can withdraw up to $60,000 per person ($120,000 for couples) from an RRSP tax-free, provided it's repaid over 15 years starting two years after withdrawal
  • Gifted funds — most lenders accept gifts from immediate family members (parents, siblings) documented with a signed gift letter confirming repayment is not required; some insured mortgage rules limit how much of the minimum down payment can be gifted
  • Proceeds from a sold property — fully acceptable and the most common source for move-up buyers

Sale proceeds, FHSA funds, and RRSP HBP withdrawals can be combined. A first-time buyer couple who has maximized both FHSA accounts and made RRSP contributions can access $120,000 in RRSP HBP room plus the full balance of their FHSAs — potentially reaching 20% down on a mid-range GTA property without touching other savings.

Closing costs: the down payment isn't your only cash requirement

The down payment is the largest cash requirement at closing, but not the only one. Budget an additional 1.5–4% of the purchase price for closing costs:

  • Land transfer tax — Ontario provincial tax plus Toronto municipal tax if buying within city limits; first-time buyer rebates can eliminate much of this on a typical first home
  • Legal fees — typically $1,500–$2,500 for a standard residential purchase
  • Home inspection — $400–$600
  • Title insurance — $250–$400
  • CMHC premium PST — the insurance premium itself avoids HST, but Ontario charges provincial sales tax (PST) on the premium at 8%, payable at closing and not rollable into the mortgage

For a $700,000 Toronto purchase with minimum down, plan for roughly $25,000–$35,000 in closing costs on top of the $45,000 down payment — meaning your total liquid cash requirement is closer to $70,000–$80,000 on closing day.

Frequently asked questions

Can I use a personal loan or line of credit for the down payment?

No. For insured mortgages (under 20% down), the entire down payment must come from your own savings, gifts, or eligible sources like RRSP/FHSA — not borrowed funds. For uninsured mortgages (20%+ down), some lenders accept a portion from a secured line of credit, but it is factored into your TDS ratio since it represents a debt payment.

Does putting more down always mean a lower monthly payment?

Yes, but the relationship isn't always linear when insurance tiers are involved. Moving from 9% to 10% down drops your CMHC premium from 4% to 3.1%, which reduces both the insured loan amount and the premium added to it. Sometimes a small additional contribution to cross a tier threshold reduces monthly payments more than the same amount applied below the threshold would.

How long does it typically take to save a down payment in the GTA?

At a savings rate of $2,000/month, a $48,750 minimum down payment on a $750,000 home takes roughly 2 years. The 20% threshold of $150,000 on the same home takes over 6 years at the same rate. FHSA contributions (up to $8,000/year) significantly accelerate this timeline because the tax refund on contributions can be recycled back into the account.

What's the FHSA and how is it different from the RRSP HBP?

The FHSA (First Home Savings Account), launched in 2023, combines the tax advantages of both the RRSP and TFSA for first-time home purchases: contributions are tax-deductible (like RRSP contributions) and qualifying withdrawals for a first home are fully tax-free (like TFSA withdrawals) — so you get the deduction on the way in and pay no tax on the way out. The HBP (Home Buyers' Plan) lets you withdraw from an existing RRSP tax-free but requires repayment over 15 years. For buyers who have access to both, using the FHSA first is generally more efficient.

Want to model your down payment timeline? Our mortgage calculator shows how different down payment amounts affect your monthly payment and total interest. Ready to see what's actually available in the GTA? Search listings by price range.