🏡 Buying a Home with 5% Down in Ontario: What You Need to Know
Are you dreaming of owning a home in Ontario but feeling overwhelmed by the thought of saving for a massive down payment? Good news! 🥳 With as little as 5% down, you can step into homeownership — especially if you're a first-time buyer.
In this guide, we’ll break down how the 5% down payment works in Ontario, what you’ll need to qualify, and share realistic examples to help you plan your next move.
💰 What Does "5% Down" Really Mean?
A 5% down payment means you're putting down 5% of the purchase price of the home upfront, and borrowing the remaining 95% through a mortgage. This is the minimum required for homes under $500,000 in Canada.
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Example:
If you’re buying a $450,000 condo in Scarborough, your minimum down payment would be:
5% of $450,000 = $22,500
Your mortgage would be: $450,000 - $22,500 = $427,500
If the home is between $500,000 and $999,999, the formula changes slightly:
5% on the first $500,000
10% on the remainder
Example:
Home price: $650,000
5% of first $500,000 = $25,000
10% of remaining $150,000 = $15,000
Total down payment = $40,000
✅ Who Can Qualify for 5% Down?
To buy with 5% down in Ontario, you'll need to meet certain conditions:
🔍 Basic Requirements:
The home must be your primary residence 🏠
You must have good credit (typically 600+)
You need stable income and employment history
Your debt service ratios must fall within lender guidelines
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🔒 CMHC Mortgage Insurance: What It Means
When you put down less than 20%, you’re required to get mortgage default insurance through providers like CMHC, Sagen, or Canada Guaranty. This protects the lender (not you) in case of default.
The cost is added to your mortgage and based on a sliding scale:
4% of mortgage amount for 5% down
3.1% for 10% down
2.8% for 15% down
💡 Tip: The more you put down, the less insurance you pay!
🛠️ Additional Costs to Budget For
Your down payment isn’t the only upfront cost. Don’t forget to budget for:
Land transfer tax (LTT) 🧾 – Ontario + municipal (e.g., Toronto)
Legal fees 💼 – $1,500–$2,500
Home inspection 🕵️♂️ – $400–$600
Appraisal fees – if required by your lender
Moving costs, utility hookups, and deposits
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🎓 First-Time Buyer Programs in Ontario
If you’re a first-time buyer, you may be eligible for several programs to help with affordability:
1. 🏠 First-Time Home Buyer Incentive
A shared equity program where the government contributes 5–10% of your purchase price, reducing your mortgage amount.
2. 💸 Land Transfer Tax Rebate
Get up to $4,000 off the provincial LTT, and an additional rebate if you're buying in Toronto.
3. 🏦 RRSP Home Buyers’ Plan
Withdraw up to $60,000 (as of 2024) from your RRSP tax-free to use for your down payment.
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🔍 Real-Life Scenario
Case Study: Maya & John – First-Time Buyers in Ajax
Purchase Price: $600,000
Down Payment: $35,000 (combination of savings + RRSP withdrawal)
Mortgage Insurance Premium: $22,800 (added to mortgage)
Monthly Payment (5.25% rate): ~$3,400/month
First-Time Buyer Rebates: $4,000 LTT + used HBP
With stable jobs and support from a realtor and mortgage agent, they were able to buy a 3-bed townhome near transit and schools, starting their real estate journey with confidence 💼🔑
📍 Final Thoughts: Is 5% Down Right for You?
Buying with 5% down is a great option for many first-time buyers in Ontario — but make sure you understand the full financial picture. Work with a trusted real estate agent, mortgage broker, and lawyer to guide you through every step.
✨ Ready to Start Your Home Search?
🏡 Let’s connect and explore your buying options today! Whether you're looking in Toronto, Scarborough, Durham or beyond — I’ll help you find a home that fits your lifestyle and your budget.
📲 Contact me at www.cwilliamshomes.com
📧 DM me on Instagram @cwilliams.com_homes
📞 Book a consultation today!