Luxury Condos Toronto

How Much Down Payment For A Condo

Wednesday Feb 23rd, 2022


luxury condos toronto

Calculating Your Downpayment for Condo In Toronto

Making plans to buy a brand new property is a reason to celebrate. However, it can be challenging to determine the exact down payment needed for a condo in Toronto. At The Toronto Condo Team, we have created an outline of down payments for condos so you have all the information and can pay for your new home.

What Is The Cost Of A Condo Downpayment?

The typical down payment for Condos in Toronto could go down to as little as 5%. However, this rate is exclusive to condos priced at about half a million dollars. The rules alter a bit once you look at condos that cost more than one million. A minimum payment of 5% is due at the beginning for the half-million dollars, and another 10% minimum is added to the remaining amount.

For condominium properties priced over one million dollars, which could be very normal, the minimum down payment is 20%. These rates and rules are always subject to change with lenders such as A lenders & B lenders. 20% downpayment on any price avoids the high ratio mortgage with CMHC.

Why Are Down payments Required To Finance A Condo Purchase?

Although a down payment may seem a burden for buyers, you need to show security to lenders as it lowers the risk they face. Banks and lenders rely on the cash you deposit to ensure that you will not default on the loan.

Down Payment Cost Estimates

The down payment you must pay can go as high as you can afford. Remember, the greater the down payment you make, the less you'll have to borrow from the bank. This means lower interest and possibly lower mortgage.

Let us take an example:

If your condo is priced at half a million dollars, the minimum down payment of 5% must be about $25,000. For condos priced at or around one million dollars, you should prepare $25,000 for the initial half, then pay the remainder of approximately $50,000 as the proportion is increased to 10%. Next, for condos priced at or above a million, you need to put a 20% downpayment, which comes at approximately $200,000. You can always apply the min insurance waiver of CMHC at 20% plus on any property as well.

How Do You Determine Your Minimum Condo Downpayment?

Your downpayment for a Condo in Toronto will depend on the price at which you purchase the condo.

If the price at which you purchase your home is less than $500,000, you are not eligible for the mortgage.

Let's say the price for buying the condo is $400,000. There is a minimum down payment of 5% of the purchase cost. The purchase cost multiplied by 5% is equivalent to $20,000.

If the cost of purchasing your luxury condo in Toronto is greater than $500,000, you should consider a mortgage.

Let's say the price for buying your home is $600,000. It is possible to determine your required down payment by adding two amounts. The first one is 5% of the initial $500,000, equal to $25,000. The second equals 10% of the amount of $100,000, which amounts to $10,000. Combine both of these amounts. It will give you a total of $35,000.

Finding Support and Source for the Down Payment

The process of securing a down payment for condo Toronto is an overwhelming task. However, you can choose several strategies to prepare yourself for the purchase. Let us look at the most effective ways to ready the down payment amount.


It's never too late to begin planning the first time you buy. You can make a down payment in the traditional method by collecting savings. However, living costs in Toronto and other cities across Canada are staggering, which means it may take some time for you to save and then plan to purchase a condo in Downtown Toronto.

By utilizing your savings, you lower the risks of struggling to pay back loans and relieve a great deal of stress off your shoulders.

Family or Friends

If you're having trouble saving or cannot reach the desired amount before the condo is taken off the market, you can always seek help from family and friends. 

The Home Buyer's Plan

A Home Buyer's Plan is essentially a benefit you get from, more specifically, out of the RRSP (Registered Retirement Savings Plan). It can help people make a substantial down payment on their condominium as you set this amount aside for retirement. You typically will have to pay tax on large withdrawal amounts.

However, if you're making withdrawals from the fund to buy your first home, you are eligible to receive up to $25,000 or the first 5% of the minimum downpayment, tax-free.

Our Condo Experts advise against this practice if you cannot pay the money back or don't plan to invest your retirement savings.

Mortgage Loan Insurance

Mortgage loan insurance, also known as mortgage default insurance, safeguards the lender from financial loss when you cannot pay your mortgage due to unavoidable circumstances. The insurance doesn't cover you. 

If the down payment you make amounts to less than 20% of the value of your house, you must purchase an insurance policy for your mortgage.

Your lender might insist that you take out mortgage insurance even if you only have an initial down payment of 20. This is typically the case if you're self-employed or have a poor credit score.

Mortgage loan insurance won't be available if:

  • The price for purchasing the house is at least $1 million.
  • The loan does not meet the standards of the mortgage insurance company

Your lender will coordinate the purchase of the mortgage insurance on your behalf when you require it.

Mortgage Loan Insurance Costs

The cost paid for loan protection is known as an insurance premium. The premium for mortgage loan insurance ranges between 0.6% to 4.50% of the value you borrow. The cost of your premium is based on the size of your deposit. The higher your deposit amount, the lower you will pay in mortgage insurance premiums.

Determine The Cost Of Your Mortgage Based On The Sum Of The Mortgage

You can pay the premium by making it a part of your mortgage or in an initial lump sum. If you can add the cost to the mortgage, you'll have to pay interest on the premium. The interest rate is the same as the mortgage rate you pay.

Ontario, Manitoba and Quebec use provincial sales tax for mortgage insurance premiums. The lender cannot add provincial tax on the premiums of your mortgage. You have to pay this tax upon receiving your mortgage.

The Land Transfer Tax(es)

In Ontario, the government imposes an amount of tax to transfer property ownership. Here, the buyer pays the tax. Taxes are determined by the percentage of the property's value and can range between 0.5% to 2.5 percent, which increases with its value. The higher the value of the property, the higher the tax.

The city of Toronto also charges tax on land transfers. If you purchase a condo or a house in Toronto, you will have to pay taxes and fees. However, first-time buyers can avail an exemption on taxes for both provincial taxes and city taxes.

Taxes for land transfer are due at closing the purchase when you receive the ownership. It is vital to ensure you have incorporated this cost into your budget.

Returns on Land Transfer Tax for First-Time Buyers

New buyers in Ontario can receive a tax refund; it comes under Ontario Land Transfer Tax that covers all or a part of it. Toronto also offers refund programs that you can apply to if you meet the eligibility criteria.

  • The maximum Land Transfer Tax refund in Ontario is $4,000
  • The highest Land Transfer Tax refund in Toronto is $4,475
  • Total refund of $8,475

The Canadian government has several incentives and programs to assist first-time home buyers.

How Do You Receive Refunds For Land Transfer Tax?

  • You must possess the status of a Canadian National or Permanent Resident
  • You must be living at the address as the "primary residence" within the first nine months after the date of the transfer of ownership
  • You've never owned any qualified property at any place across the world
  • If you're buying the home with your spouse, neither of you could have owned a residence anywhere in the world while you were married

Make sure you save as much as possible to make a downpayment for Condo Toronto. The more significant the amount of your down payment, the lower the mortgage that can save many thousands in interest fees.

What Amount Of A Down Payment Affects The Price Of The Mortgage?

Imagine you purchase a house that costs $400,000.

Consider the following scenarios:

  • The rate of interest is 4%
  • The amortization period is 25 years
  • The payment frequency is usually monthly
  • Mortgage includes mortgage premiums for loan insurance

Reminders and Tips Before Making Your Down Payment from TorontoCondoTeam

Our mortgage experts at Toronto Condo Team have a few suggestions before you decide on an amount for your down payment. 

  • Make a credit inquiry to determine your credit score before deciding on the amount of the down payment or mortgage. This way, you can determine if you qualify to receive a lower rate or more money
  • Conduct your due diligence about the lender of your mortgage. Are they trustworthy? Are they accommodating? Such questions are great ones to ask.
  • Don't put yourself in a situation that you can't take care of. Be aware of your limitations, and don't sign an agreement on a mortgage that you cannot repay.

Check out our buyers guide or more information on downpayment and buying a condo in Toronto.

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