Toronto Condo Buyers

Smart Backup Down Payment Sources for Toronto Condos

Saturday Jul 31st, 2021


Several homebuyers and tenants dream of owning a home or real estate property in Toronto. First-time buyers purchasing Toronto condos often find the down payment very demanding and challenging. This is because you need to pay at least 5% as a down payment for a condo. That will approve your application for an insured mortgage.

If you are an investor who invests in condos for sale with a purchase price of over a million in Toronto, then generally, the down payment for the same would be around 20%. On the other hand, the Loan to Equity Ratio is determined by your Debt Service and Affordability. The average down payment for Toronto condos for first-time buyers who acquire insured mortgages is 10%.

So, now that you know how much the down payment would be required for those lofts for sale in Toronto, let us give you a quick brief of what a down payment is. 

What is a Down Payment?

A down payment is a portion of the total cost of an item purchased on credit. In other words, it's a small payment on a large purchase. The payment is a percentage of the entire cost of the purchase. For example, if you purchase a car or a house, you would make an initial upfront payment known as a down payment.

Even if you don't have to, it's a good idea to make a down payment on a loan. This will ensure that throughout the loan's term, you save money on interest payments. When opting for a home loan for Toronto condos, it's a good idea to put down 5 percent to 20 percent of the cost of an expensive asset like a house. The remaining loan balance can be repaid over time via EMIs (equivalent monthly instalments ).

Aside from the down payment, there are other expenditures associated with buying a condo. For example, moving charges, land transfer tax, and so on. However, when it comes to land transfer tax, there are some exclusions for first-time house buyers.

If you don't have enough money for a down payment for purchasing those Toronto condos for sale, there are various clever options available.

In this article, we will be discussing six such sources of gathering money for making the down payments.

Top 6 sources of the down payment for buying condos for sale in Toronto

Not everyone can afford a down payment on a condo worth a hundred or two hundred thousand dollars. As a result, first-time buyers may have to get inventive to leverage and save for their first condo down payment. The methods mentioned below are what can help you to save for a down payment for their Toronto condos.

Personal Investments

Personal savings is the first and easiest source that comes to mind. Many of us have put money into savings accounts in the hopes that it will grow. You can withdraw that money from your savings account or stocks in your Tax-Free Savings Account that is not performing well and use it toward homeownership.

To decide whether to use your savings towards buying Toronto condos or not, compare the performance of your savings account to the performance of a condo investment in the past before making your decision.

RRSP (Registered Retirement Savings Plan) Home Buyer's Plan

You can now put up to $35,000 of your RRSP money towards your condo down payment according to the Federal Government's Home Buyers' Plan. You can also use up to $70,000 of your RRSP for a down payment on a new condo if you are a couple. This plan is a great way to start investing by purchasing those Toronto condos for sale that you've wanted.

You are eligible if the money has been in your RRSP for at least three months. The best news is that if you pay it back within 15 years, you won't have to pay taxes on the money you took out of your RRSP plan. Another significant benefit of this source is the ability to deduct your income from taxes.

Bank of Mom and Dad or gifted funds

In recent years, many of the homes and Toronto condos for sale have seen enormous capital gains. Older parents who have the ownership of the house bought it about 25 to 30 years ago for a few thousand dollars. By now, most of the parents or grandparents have paid off their home loans. And, presently, their property is worth millions. This will help them get a home equity line of credit. It can assist their adult children with the down payment on their Toronto condos.

Some parents have savings and are willing to lend a hand to their children to help them achieve their dream of homeownership. Most parents are ready to help their children with their debts.


Let us explain this to you with an example. Two people have a budget of up to $500,000 and want to reside near downtown Toronto. But, both can't find lofts for sale in Toronto or condos for sale in Toronto suitable in that price range. They then join forces and buy a home or a condo together. In this way, they can purchase a $900,000 duplex and live in it. For smaller families or younger couples, this is a viable option.

Proceeds from the selling of a home

Existing homeowners have an additional source of down payment funds in the form of their existing home. If you are putting your loft or condo for sale to buy a new one, you can use the equity obtained from it.

Keep in mind that this is only possible if you can sell your existing home while still looking for Toronto condos for sale or lofts for sale in Toronto. The amount left after you pay back your mortgage and other expenses would be great for down payments.


To acquire the down payment assistance you need, you will have to do some legwork with the aforementioned choices. However, you may not have considered another option: looking for more money within your budget. No, it doesn't mean you need to work a second or a third job. Merely going over your monthly spending with a fine-tooth comb can help you decide where you can save money.

The 50/20/30 budget guideline is one of many budgeting "rules" and ideas that you can use. According to this rule, you should use 50℅ of your income for paying debts or rent. Use the 20% for other living expenses, and 30℅ for 30% for leisure. This is just one of the numerous budgeting rules that can help you get funds for a down payment.


If you aim to become a homeowner in Toronto by this year, you can always connect with our professional team. Yes, the Toronto Condo Team can help you with a range of options to process the down payment

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