Can You Buy a Home With 5% Down in Ontario?
Learn how 5% down works in Ontario, including minimum down payment rules, CMHC insurance, closing costs, and first-time home buyer considerations.
Buying a home in Ontario can feel like a race against rising prices, mortgage requirements, and the amount of cash you need before you can even make an offer. For many buyers, the biggest question is simple: Can you actually buy a home with only 5% down?
Yes, you can.
However, the 5% figure does not apply to every home or every purchase price. Canada's minimum down payment rules use a tiered system, and buyers also need to account for mortgage insurance, closing costs, land transfer tax, and other expenses that can significantly increase the amount of cash required to complete the purchase.
For buyers considering a bungalow, detached home, townhouse, or other owner-occupied property in Ontario, understanding these rules before starting the home search can make the entire process much easier.
This guide explains how the 5% down payment works, how much you actually need at different price points, how CMHC mortgage insurance affects your costs, what credit and income requirements lenders consider, and which strategies can help first-time buyers build their purchasing power.
How Much Down Payment Do You Need in Ontario?
The minimum down payment depends on the purchase price.
For an owner-occupied home with one or two units, the current CMHC structure generally works as follows:
$500,000 or less: 5% of the purchase price
More than $500,000 but below $1.5 million: 5% on the first $500,000 plus 10% on the portion above $500,000
$1.5 million or more: Mortgage loan insurance is not available, so a minimum 20% down payment is generally required
That means the common idea that every Ontario home requires 20% down is incorrect. A buyer may qualify with substantially less, provided the property and mortgage meet the applicable requirements.
Example of the Tiered Down Payment
Suppose you are buying a home for $750,000.
The calculation is:
First $500,000 × 5% = $25,000
Remaining $250,000 × 10% = $25,000
Minimum down payment = $50,000
So although $50,000 represents only about 6.67% of a $750,000 purchase price, that is the minimum down payment under the tiered system.
Minimum Down Payment Examples for Ontario Homes
Purchase Price | Down Payment Calculation | Minimum Down Payment | Effective Percentage |
$400,000 | 5% of $400,000 | $20,000 | 5.00% |
$450,000 | 5% of $450,000 | $22,500 | 5.00% |
$500,000 | 5% of $500,000 | $25,000 | 5.00% |
$600,000 | $25,000 + 10% of $100,000 | $35,000 | 5.83% |
$650,000 | $25,000 + 10% of $150,000 | $40,000 | 6.15% |
$700,000 | $25,000 + 10% of $200,000 | $45,000 | 6.43% |
$750,000 | $25,000 + 10% of $250,000 | $50,000 | 6.67% |
$800,000 | $25,000 + 10% of $300,000 | $55,000 | 6.88% |
$900,000 | $25,000 + 10% of $400,000 | $65,000 | 7.22% |
$1,000,000 | $25,000 + 10% of $500,000 | $75,000 | 7.50% |
$1,250,000 | $25,000 + 10% of $750,000 | $100,000 | 8.00% |
$1,499,999 | $25,000 + 10% of $999,999 | $124,999.90 | About 8.33% |
$1,500,000+ | 20% of purchase price | $300,000+ | 20%+ |
The important takeaway is that 5% is the starting point, not a flat 5% requirement on every Ontario home.
Once the purchase price exceeds $500,000, the effective percentage gradually increases.
Is 5% Down Only Available to First-Time Homebuyers?
No.
This is one of the most common misconceptions surrounding minimum down payments.
The minimum down payment rules are not exclusively a first-time buyer program. Eligibility depends on the mortgage, property, occupancy and borrower circumstances.
That said, 5% down does not mean every type of property can be purchased with 5% down.
For example, a property purchased strictly as a non-owner-occupied investment property is subject to different financing rules.
So the better question is not simply:
"Am I a first-time buyer?"
It is:
"What type of property am I buying, how will it be occupied, and which mortgage insurance rules apply to my purchase?"
What Happens When You Put Less Than 20% Down?
A down payment below 20% generally means the mortgage is considered high-ratio and requires mortgage loan insurance.
Mortgage loan insurance protects the lender against borrower default. It does not protect the homeowner from losing money or from being unable to make mortgage payments.
CMHC currently publishes the following premium schedule for owner-occupied properties:
Loan-to-Value Ratio | CMHC Premium |
Up to 65% | 0.60% |
65.01%–75% | 1.70% |
75.01%–80% | 2.40% |
80.01%–85% | 2.80% |
85.01%–90% | 3.10% |
90.01%–95% | 4.00% |
With a minimum down payment of 5% on an eligible purchase, the mortgage is generally at 95% loan-to-value, placing it in the 4.00% premium tier.
The insurance premium is generally added to the mortgage rather than paid entirely upfront. However, there is an important Ontario-specific cost that buyers need to remember.
The Ontario PST on Mortgage Insurance
Ontario is one of the provinces where provincial sales tax applies to mortgage loan insurance premiums.
The PST cannot be added to the mortgage amount, so the buyer must have sufficient cash available to pay it at closing.
Consider a simplified example.
Example: Buying a $700,000 Home With Minimum Down Payment
Purchase price: $700,000
Minimum down payment:
First $500,000 × 5% = $25,000
Remaining $200,000 × 10% = $20,000
Total down payment = $45,000
Mortgage before insurance:
$700,000 − $45,000 = $655,000
Because the loan-to-value ratio is approximately 93.57%, the applicable CMHC premium falls within the 4.00% tier.
CMHC premium at 4.00%:
$655,000 × 4% = $26,200
That premium is generally added to the mortgage.
The Ontario provincial sales tax on that premium is a separate cash expense. At 8%, the tax would be:
$26,200 × 8% = $2,096
So the buyer should not assume that having the $45,000 down payment means they have enough money to close.
There are still other transaction costs to consider.
How Much Cash Do You Actually Need to Buy a Home?
Your down payment is only one part of the money required to purchase a property.
A useful general planning range is approximately 1.5% to 4% of the purchase price for closing costs, although the actual amount varies depending on the transaction.
Potential expenses can include:
Ontario Land Transfer Tax
Toronto Municipal Land Transfer Tax, if applicable
Legal fees and disbursements
Title insurance
Home inspection
Property tax adjustments
Utility adjustments
Mortgage insurance tax
Appraisal costs, where applicable
Other lender or transaction-related expenses
This is why a buyer looking at a $700,000 home should not think of $45,000 as the complete cash requirement.
The real target should be the down payment plus an appropriate closing-cost reserve.
First-Time Homebuyer Land Transfer Tax Rebates in Ontario
First-time buyers may be eligible for an Ontario Land Transfer Tax refund of up to $4,000.
The refund can reduce the amount of land transfer tax a qualifying first-time buyer needs to pay.
Buying in Toronto
Toronto buyers have an additional consideration because the City charges a Municipal Land Transfer Tax in addition to the provincial Land Transfer Tax.
Eligible first-time buyers can receive a Toronto Municipal Land Transfer Tax rebate of up to $4,475.
Therefore, an eligible first-time buyer purchasing in Toronto may potentially benefit from both:
Up to $4,000 in Ontario's first-time homebuyer refund
Up to $4,475 in Toronto's municipal rebate
Eligibility conditions apply, so buyers should confirm their circumstances before relying on the maximum rebate amounts.
What Credit Score Do You Need for a 5% Down Payment?
Credit score is another important part of mortgage qualification.
CMHC's current requirements indicate that at least one borrower or guarantor generally needs a credit score of at least 600 for homeowner mortgage insurance, although approval depends on the overall application.
However, meeting a minimum credit-score requirement does not automatically mean a mortgage will be approved.
Lenders can also consider:
Income
Employment history
Existing debts
Credit history
Debt-service ratios
Down payment source
Property type
Property value
Overall financial stability
This is why two buyers with similar incomes can sometimes qualify for different mortgage amounts.
Income and Debt Ratios Matter Too
Mortgage lenders do not simply look at your salary and multiply it by a certain number.
They assess whether your income can reasonably support the proposed housing costs and other debts.
CMHC's current guidance lists maximum debt-service thresholds of:
GDS: 39%
TDS: 44%
For insured mortgages, these calculations are based on the applicable qualifying interest rate rather than simply the rate you see advertised by the lender.
Your housing costs can include items such as:
Mortgage payment
Property taxes
Heating costs
Certain portions of condominium fees
Your total debt obligations can also include items such as:
Car loans
Lines of credit
Credit card obligations
Other recurring debts
This is one reason a buyer should get a mortgage pre-approval before seriously shopping for a property.
Understanding the Mortgage Stress Test
The mortgage stress test is designed to determine whether borrowers could continue handling their mortgage payments if financial conditions become more difficult.
For uninsured mortgages, OSFI currently sets the minimum qualifying rate at the greater of:
The contract mortgage rate + 2 percentage points, or 5.25%.
The same qualifying-rate test has also been implemented for insured mortgages by the federal government.
For example, if a lender offers a mortgage at 4.5%, a qualifying rate based on the contract rate plus 2% would be 6.5%.
The purpose is not to make you pay 6.5% on your actual mortgage. Instead, it is a qualification test used to determine whether your finances can withstand a higher payment.
Can You Get a 30-Year Mortgage With 5% Down?
Yes, but there are specific eligibility conditions.
CMHC Home Start provides mortgage insurance for eligible high-ratio borrowers where at least one borrower is a first-time homebuyer or the property is newly built and has not previously been occupied for residential purposes.
The property must also be intended for homeowner occupancy.
This means the statement "all first-time buyers automatically get a 30-year mortgage" is too broad.
Instead, think of it this way:
30-year insured amortization can be available through CMHC Home Start when the buyer and property meet the program's eligibility requirements.
For buyers who qualify, the longer amortization can reduce the required monthly payment compared with a 25-year amortization, although it can also result in more interest paid over the life of the mortgage.
Where Can Your Down Payment Come From?
Your down payment does not necessarily have to come entirely from a traditional savings account.
Potential sources can include:
Personal savings
Sale proceeds from another property
RRSP funds
Non-repayable financial gifts from relatives
Certain other acceptable sources, depending on the mortgage program
If a family member is providing a gift, the lender may require a formal gift letter confirming that the money does not need to be repaid.
Always discuss the source of your down payment with your mortgage professional before moving funds around.
First Home Savings Account Can Help Build the Down Payment
For eligible first-time buyers, the First Home Savings Account can be an important part of a long-term down payment strategy.
The FHSA currently allows eligible individuals to contribute up to $8,000 per year, with a $40,000 lifetime contribution limit. Contributions are generally deductible, while qualifying withdrawals used to purchase a first home can be made tax-free.
For someone saving toward a future Ontario home purchase, using an FHSA alongside other savings strategies can make it easier to build the required cash over time.
The Home Buyers' Plan Can Also Help
The federal Home Buyers' Plan allows eligible first-time homebuyers to withdraw up to $60,000 from an RRSP to purchase or build a qualifying home.
The FHSA and HBP can potentially be used for the same home if the buyer meets the applicable requirements for each program.
However, RRSP withdrawals under the HBP come with repayment rules, so buyers should understand those obligations before treating the full withdrawal as permanently available cash.
Can You Buy an Investment Property With 5% Down?
Generally, you should not assume that the 5% minimum down payment applies to a pure investment property.
Owner-occupied properties and non-owner-occupied rental properties are treated differently under mortgage insurance programs.
For example, CMHC's small rental loan requirements generally call for at least 20% equity for eligible non-owner-occupied two- to four-unit properties.
A property where the buyer lives in one of the units can fall under different owner-occupied financing rules.
Because the distinction can have a major effect on the required down payment, buyers should establish the intended occupancy before making assumptions about financing.
A 5% Down Payment Does Not Mean a 5% Budget
This is perhaps the most important point for buyers to understand.
If you are purchasing a $500,000 home, your minimum down payment may be only $25,000.
But that does not mean you should enter the market with exactly $25,000 in savings.
You may still need money for:
Land transfer tax
Legal expenses
Title insurance
Home inspection
Adjustments
Mortgage insurance tax
Moving expenses
Immediate repairs or maintenance
Emergency reserves
A financially comfortable purchase is about more than simply qualifying for the mortgage.
Practical Example: Planning for a $700,000 Ontario Home
Let's bring everything together.
Suppose you are considering a $700,000 owner-occupied home.
Minimum down payment
$25,000 on the first $500,000
+ $20,000 on the remaining $200,000
Minimum down payment = $45,000
Mortgage before insurance
$700,000 − $45,000
Base mortgage = $655,000
Mortgage insurance
At approximately 93.57% loan-to-value, the applicable CMHC premium falls within the 4.00% tier.
$655,000 × 4%
Insurance premium = $26,200
Ontario tax on insurance premium
$26,200 × 8%
PST = $2,096
The $26,200 insurance premium can generally be added to the mortgage, but the provincial tax cannot be added to the loan amount.
And this still does not include legal fees, land transfer tax, title insurance, inspection costs and other closing expenses.
That is why a buyer should think in terms of total cash required, rather than simply asking whether they have the minimum down payment.
Strategies to Make a 5% Down Purchase More Manageable
If saving for a home feels overwhelming, a few strategies can make the process more realistic.
Start With a Realistic Purchase Price
Don't begin with the maximum mortgage amount a lender says you qualify for.
Instead, consider the monthly payment alongside property taxes, insurance, utilities, maintenance and other household expenses.
A slightly lower purchase price can provide significantly more financial breathing room.
Build the Closing-Cost Fund Separately
Treat your closing-cost money as a separate savings target from your down payment.
This prevents a situation in which you reach your down payment goal but discover you do not have enough cash to complete the transaction.
Use Registered Home-Buying Programs Strategically
Eligible first-time buyers can investigate the FHSA and HBP as potential ways to increase their available home-buying funds.
Get Pre-Approved Before Shopping Seriously
A pre-approval can help establish a realistic price range before you start viewing properties.
It can also help you understand how the lender treats your income, debts, credit history and down-payment source.
Keep an Emergency Reserve
Putting every available dollar into the purchase can leave a homeowner financially exposed after closing.
A new home can bring unexpected costs, from appliance replacements to repairs and maintenance.
The goal should not simply be to buy the home. It should be to buy the home without immediately becoming financially stretched.
FAQs
Can I buy a home in Ontario with 5% down?
Yes. Eligible owner-occupied purchases can generally qualify for a minimum down payment of 5% on the first $500,000, with 10% required on the portion above $500,000, subject to applicable mortgage insurance and lending requirements.
Is 5% down only for first-time homebuyers?
No. The minimum down-payment structure is not exclusively a first-time buyer benefit. Eligibility depends on the property, occupancy, borrower and mortgage program.
How much do I need down on a $600,000 home?
The minimum down payment is $35,000: 5% of the first $500,000 ($25,000) plus 10% of the remaining $100,000 ($10,000).
How much do I need down on a $700,000 home?
The minimum down payment is $45,000.
How much do I need down on a $1 million home?
The minimum down payment is $75,000: $25,000 on the first $500,000 plus $50,000 on the remaining $500,000.
Can I buy a $1.5 million home with less than 20% down?
For CMHC-insured homeowner financing, the purchase price or lending value must be below $1.5 million. A property at $1.5 million or more therefore does not qualify for the insured high-ratio structure, meaning buyers generally need at least 20% down.
What credit score do I need?
CMHC's current requirements indicate that at least one borrower or guarantor generally needs a credit score of at least 600 for homeowner mortgage insurance, although approval depends on the overall application.
Do I have to pay CMHC insurance with cash?
The insurance premium itself can generally be added to the mortgage, but applicable provincial sales tax on the premium cannot be added to the loan. In Ontario, this creates an additional cash requirement at closing.
Can first-time buyers use the FHSA and Home Buyers' Plan together?
Potentially, yes. Eligible buyers can use both programs for the same qualifying home if they meet the requirements applicable to each program.
How much should I budget for closing costs?
A useful general planning range is approximately 1.5% to 4% of the purchase price, although your actual costs will depend on the property and transaction.
Final Thoughts
Buying a home with 5% down is possible in Ontario, but the headline percentage only tells part of the story.
The minimum down payment depends on the purchase price, and buyers putting less than 20% down generally need mortgage loan insurance. The insurance premium, Ontario tax on that premium, land transfer tax, legal expenses and other closing costs can all increase the amount of cash needed to complete the purchase.
For a $500,000 home, the minimum down payment can be $25,000. For a $700,000 home, it rises to $45,000. At $1 million, it reaches $75,000. And once the purchase price reaches $1.5 million, the insured high-ratio structure is no longer available.
The smartest approach is therefore to look beyond the minimum.
Understand your down payment, estimate your closing costs, check your mortgage qualification, review available first-time buyer programs, and maintain enough financial flexibility to handle life after closing.
Whether you are looking for a detached home, townhouse or bungalow in Mississauga, Brampton, Oakville, Hamilton, Toronto or another Ontario community, knowing your true purchasing budget before you start making offers can put you in a much stronger position.
The goal isn't simply to find out whether you can buy a home with 5% down. It's to understand exactly how much cash you need, what you can comfortably afford, and how to enter the Ontario housing market without stretching your finances too far.
