(3-Min Read)

One of the biggest misconceptions in Toronto real estate is that you need 20% down payment to buy a home. This belief has stopped countless buyers from entering the market when they didn’t actually have to wait.

The truth is, most homes in Toronto can be purchased with less. Understanding how down payments really work could mean buying your first home much sooner than you think.

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How Down Payments Actually Work in Canada

In Canada, down payments are calculated in increments, not as one flat percentage.

For homes priced under $1 million, the minimum down payment is:

• 5% on the first $500,000
• 10% on any amount between $500,000 and $999,999

Once a home hits $1 million or more, the rules change and a full 20% down payment is required.

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Real Toronto Home Examples

A $400,000 home only requires 5% down, which is $20,000. (now that sounds like a nice number)

A $650,000 home is split into two portions:
• 5% on the first $500,000 = $25,000
• 10% on the remaining $150,000 = $15,000

A $1,000,000 home requires 20% down
The minimum down payment is:
• 5% on the first $500,000 = $25,000
• 10% on the remaining $500,000 = $50,000

Why People Think You Need 20% Down

Buyers were being told to put 20% down for one main reason: to avoid default mortgage insurance (often called CMHC insurance). When you put less than 20% down, this insurance is required and is added to your mortgage. It protects the lender (not you) but it allows buyers to enter the market with more ease as less cash upfront is required.

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Why Waiting to Save 20% Can Cost You More

In a fast paced market like Toronto, waiting can be far more expensive than paying mortgage insurance. While you’re saving an extra $30,000–$60,000, home prices may rise by six figures. Rent continues to go up. And the monthly difference between buying with 10% down VS 20% is often far smaller than people expect. Mortgage insurance is a one-time cost! Price appreciation, higher rents, and lost of equity are ongoing costs. For many first-time buyers, getting into the market sooner with the minimum down payment can build wealth faster than waiting years to hit 20%.

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When Putting the Minimum Down Payment Makes Sense

Your first home doesn’t have to be your forever home. It just has to get you started. Buying earlier allows you to:

• Build equity instead of paying rent
• Benefit from long-term price growth
• Use that equity toward your next home In Toronto, time in the market often matters more than the size of your down payment.

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If you’re waiting to buy because you believe you need 20% down, it might be time to rethink the plan and run the numbers again. Sometimes, buying sooner with less is the smartest move you can make.

Let us help you get there faster and smarter!