Back to Blog
2 Apr

Down Payment in Ontario: It’s Not Just a Number. It’s a Strategy.

General

Posted by: Sara Taheri

Most people start here:

“How much do I need for a down payment?”

But after working with so many clients, I can tell you that’s not the real question.

The better question is:

“How should I structure my down payment so I don’t create pressure later?”

Because your down payment doesn’t just affect your approval.
It affects your monthly comfort, your flexibility, and your next move.

Let’s Start With the Basics (But Keep It Real)

In Canada, your minimum down payment is:

  • 5% on the first $500,000
  • 10% on the portion between $500,000 and $1.5M
  • 20% for properties over $1.5M

So yes, there are rules.

But what matters more is what happens after you choose your number.

The Part Most People Don’t Fully Understand

Your down payment actually puts you into one of two categories, and this is where strategy begins.

When You Put less than 20% Down Payment

This is called a high-ratio mortgage or insured mortgages.

What that really means:
You’re borrowing more than 80% of the home’s value.

Because of that, lenders require mortgage default insurance.

Here’s how I explain it simply:

  • The insurance protects the lender, not you
  • You don’t pay it upfront
  • It gets added to your mortgage amount

So your mortgage becomes slightly higher.

But here’s the part most people don’t expect:

These mortgages often come with better interest rates because they’re insured.

So it’s not automatically a negative. It’s just a different structure.

When You Put 20% or More Down

This is a conventional mortgage.

Now:

  • No mortgage insurance is required
  • Your loan is 80% or less of the property value

It sounds like the “ideal” scenario, and in many cases it is.

But this is where I push people to think a little deeper.

The Biggest Misconception: “I Need 20%”

I hear this all the time.

“I’ll wait until I have 20%.”

But what’s often missing is the bigger picture.

While you’re waiting:

  • Prices may increase
  • Opportunities may pass
  • Your timeline may shift

So the real question is not:

“Is 20% better than 5%?”

It’s:

“What position do I want to be in after I buy?”

Where Your Down Payment Can Come From

Another area where people limit themselves unnecessarily.

Your down payment can come from:

  • Savings, Chequing, Investments: Any cash down payment needs a 90-day history. That means providing bank statements showing the funds have been in your account, along with your name and account number to confirm ownership.
  • Gifted Down Payment from a direct family member: Gifted down payments from family must be a true gift, not a loan. There can’t be any expectation of repayment. We’ll provide a simple letter for both sides to sign confirming that the funds are non repayable.
  • RRSP (Home Buyers’ Plan)
  • Equity from another property: Borrowed down payment funds must come from equity in an existing property if there is enough equity available in the existing property. We’ll need mortgage statements to confirm there’s enough available equity.
  • Sale Proceeds: If you’re using funds from the sale of your current home for your down payment, we’ll need the firm sale agreement, your mortgage statement, and proof the funds are deposited. If your sale closes after your purchase, bridge financing can help cover the gap.

This is where strategy really matters.

Because it’s not just about gathering funds.
It’s about how you use them without putting yourself in a tight position.

The Emotional Trap No One Talks About

People treat the down payment like a finish line.

“I just need to get there.”

But it’s actually the starting point.

If you stretch everything just to hit that number:

  • You may feel financially tight after closing
  • You lose flexibility
  • You create stress instead of stability

And that’s not the goal.

A Smarter Way to Think About It

Instead of asking:

“What’s the minimum I need?”

Ask:

“What structure gives me the strongest position after I get the keys?”

That might mean:

  • Entering the market sooner with less than 20%
  • Keeping some savings instead of putting everything down
  • Combining different sources strategically

Final Thought

Down payment is not just a percentage.
It’s a decision that shapes everything that comes after.

The right approach depends on:

  • Your income
  • Your comfort level
  • Your long-term goals

Because buying a home should feel like progress
Not pressure

If you’re thinking about buying and want to understand what structure makes the most sense for you, I’m always happy to walk through it with you.

Sometimes one small adjustment in how you structure your down payment can completely change your experience after you move in.

You can contact me today if you have any questions or concerns at:
416-879-2985
sara@sarasecuremortgages.com