Chapter 2
Downpayment Requirements & Calculations for Ontario Buyers
The minimum downpayment required in Canada scales based entirely on the total purchase price of the property. Here is exactly how the tiers stack up and when CMHC-style default insurance kicks in.
Tiered Minimum Downpayment Scale
| Purchase Price Tier | Downpayment Formula |
|---|---|
| $500,000 or Less | Flat 5% of the entire purchase price. |
| $500,001 to $1,499,999 | 5% on the first $500,000 + 10% on the remaining balance. |
| $1,500,000 or More | Flat 20% of the entire purchase price. |
Minimum Downpayment Examples
- On a $400,000 home: You need a flat 5% = $20,000.
- On an $800,000 home: 5% on the first $500k ($25,000) + 10% on the remaining $300k ($30,000) = $55,000.
- On a $1,100,000 home: 5% on the first $500k ($25,000) + 10% on the remaining $600k ($60,000) = $85,000.
Understanding Mortgage Default Insurance
If your downpayment sits between 5% and 19.99%, Canadian rules mandate that you carry Mortgage Default Insurance (CMHC, Sagen, or Canada Guaranty). This insurance protects the lender if you default on payments.
The premium ranges depending on your downpayment size (e.g., up to 4% of the loan amount when putting 5% down) and is automatically added to your mortgage balance. If you put 20% or more down, you have enough equity buffer that this insurance premium is waived entirely.
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