First Time Home Buyer Ontario Down Payment: The Minimum and Where It Comes From

The short answer

The first time home buyer Ontario down payment follows a federal formula, not a provincial one. You need 5% of the first $500,000 of the price and 10% of the portion above $500,000. From $1.5 million the minimum is 20% of the whole price.

Most first time buyers know that part. What trips people up is the second question a lender asks: where did the money come from? The Financial Consumer Agency of Canada (FCAC) says the minimum down payment normally has to come from your own funds. CMHC, the federal housing agency that insures mortgages, lists the sources it accepts and charges more to insure a loan when the down payment is borrowed.

This post covers both. It is general information, so confirm your own situation with a mortgage professional before you make an offer.

First time home buyer Ontario down payment by purchase price

FCAC sets out the rule in three bands. Here is what it means at round prices. These are illustrations, not market figures.

Purchase price	Calculation	Minimum down payment
$400,000	5% of $400,000	$20,000
$600,000	5% of $500,000 plus 10% of $100,000	$35,000
$900,000	5% of $500,000 plus 10% of $400,000	$65,000
$1,200,000	5% of $500,000 plus 10% of $700,000	$95,000
$1,500,000	20% of $1,500,000	$300,000

The jump at $1.5 million comes from the price cap on insured mortgages. Finance Canada raised the cap from $1 million to $1.5 million on December 15, 2024. CMHC’s current rules say the purchase price must be below $1,500,000 for a homeowner loan. Some older text on the FCAC down payment page still refers to the $1 million cap, so rely on the Finance Canada announcement for the current figure.

Finance Canada’s own example shows the effect: the minimum down payment on a $1.4 million home became up to $165,000 lower. Under the old cap that buyer needed 20% of the price: $280,000. Under the current formula it is $115,000.

For a Toronto purchase, our guide for first time home buyers in Toronto lines these rules up with the two land transfer taxes and their rebates.

Where the down payment can come from

CMHC lists the traditional sources as savings, the sale of a property and a non-repayable financial gift from a relative. Two federal accounts add to those for first time buyers.

Source	What the federal rules say
Savings	A traditional source under CMHC’s rules
Sale of a property	A traditional source under CMHC’s rules
Gift from a relative	Accepted by CMHC when it is non-repayable
First Home Savings Account (FHSA)	Up to $8,000 a year and $40,000 in total; qualifying withdrawals are tax-free
Home Buyers’ Plan (HBP)	Up to $60,000 withdrawn from your RRSPs, repaid over 15 years
Borrowed funds	Only as a non-traditional source, at arm’s length, with a higher premium

A gift from family

A gift has to be just that. CMHC’s wording is a non-repayable financial gift from a relative. Money that has to be paid back is not a gift under that wording. Your lender will tell you how it wants the gift confirmed, so ask before the money moves.

The FHSA

The CRA sets FHSA participation room at $8,000 in the year you open your first FHSA, with a lifetime limit of $40,000. Unused room can be carried forward, up to $8,000. A withdrawal is tax-free when you meet all the qualifying conditions, including:

• you are a first time home buyer at the time of the withdrawal
• you have a written agreement to buy or build a qualifying home, with completion before October 1 of the year after the withdrawal
• you intend to live in the home as your principal place of residence within one year of buying or building it

If a condition is not met when you withdraw, the CRA treats the withdrawal as taxable income.

The Home Buyers’ Plan

The HBP lets you withdraw up to $60,000 from your RRSPs toward a qualifying home. The money is paid back to your RRSP over 15 years. For a first withdrawal made from January 1, 2026 to December 31, 2028, the CRA says the repayment period starts in the fifth year after the year of the first withdrawal. A first withdrawal in 2026 means a first repayment year of 2031.

The CRA confirms that an FHSA withdrawal and an HBP withdrawal can be used for the same qualifying home. Our post on the FHSA and the Home Buyers’ Plan compares the two accounts in more depth.

Borrowing the down payment and what it costs

CMHC does accept some borrowed money, within limits. For one and two unit homes insured at 90.01% to 95% of the value, it allows non-traditional sources such as an unsecured personal loan or an unsecured line of credit. The funds must be at arm’s length and not tied to the sale.

The cost shows up in the premium. CMHC charges 4.50% of the mortgage at that loan-to-value when the down payment is non-traditional, against 4.00% with a traditional one. Here is an illustration with round numbers.

$600,000 purchase with the minimum $35,000 down	Traditional down payment	Borrowed down payment
Mortgage before insurance	$565,000	$565,000
Loan-to-value	94.2%	94.2%
CMHC premium rate	4.00%	4.50%
Premium	$22,600	$25,425

The borrowed version costs $2,825 more in premium. The loan also has its own payments, which count among your other debts when the lender works out your total debt service ratio. CMHC’s maximum is 44%. Our post on the mortgage stress test in Toronto explains how that ratio is tested.

How the size of the down payment changes the premium

Putting more down lowers the premium rate as well as the loan. These are CMHC’s rates on the total loan.

Down payment on a $600,000 purchase	Mortgage	Loan-to-value	Premium rate	Premium
$35,000 (the minimum)	$565,000	94.2%	4.00%	$22,600
$60,000 (10%)	$540,000	90.0%	3.10%	$16,740
$90,000 (15%)	$510,000	85.0%	2.80%	$14,280

FCAC says premiums range from 0.6% to 4.5% of the mortgage and that a larger down payment means a lower premium. In Ontario the premium is subject to provincial sales tax. CMHC and FCAC both say that tax cannot be added to the mortgage, so budget for it in cash when you get the mortgage, alongside the closing costs of buying in Toronto.

A worked example: putting the sources together

This is an illustration with round numbers, not a real client. A single first time buyer is buying a $700,000 home.

Item	Amount
Minimum down payment: 5% of $500,000 plus 10% of $200,000	$45,000
FHSA, four years of $8,000 contributions	$32,000
Home Buyers’ Plan withdrawal	$10,000
Savings	$3,000
Total down payment	$45,000
Mortgage before insurance	$655,000
Premium at 4.00% (loan-to-value 93.6%)	$26,200

FHSA growth would add to the $32,000. The HBP amount is repaid to the RRSP over 15 years. If the buyer had borrowed the $3,000 instead of saving it, the down payment would include a non-traditional source and the premium rate would be 4.50%: a premium of $29,475.

Before you make an offer

1. Work out the minimum for your price range with the formula above.
2. List each source of your down payment and where it sits today.
3. Ask your lender what records it needs for each source, including any gift.
4. Check your FHSA and HBP conditions before you withdraw, not after.
5. Set aside cash for the land transfer taxes, legal fees and the sales tax on the premium. The land transfer tax calculator works out both Toronto taxes and the first time buyer rebates.

Our buyer’s guide covers the purchase from offer to closing and the Toronto mortgage calculator shows the payment at any price. If you are planning a first purchase in Toronto and want to talk it through, contact us.