How Much Down Payment Do I Need to Buy a Home or Investment Property in Ontario, Canada?

One of the biggest questions new real estate investors ask is: “How much down payment do I need?”

Whether you plan to live in your property or rent it out, understanding the rules and options around the down payment is critical. Things have changed recently in Ontario, and there are opportunities you may not know about.

At Regalway Homes, we can help you start your investing journey the right way: with clarity, confidence, and partnerships.

Understanding Down Payment Basics in Canada

In Canada, your minimum down payment depends on the price of the home. The Government of Canada² outlines these rules:

1. For homes priced $500,000 or less, the minimum down payment is 5% of the price.

2. For homes priced above $500,000 up to less than $1,500,000, you need 5% of the first $500,000 plus 10% of the amount above $500,000.

3. For homes priced $1,500,000 or more, the minimum down payment is 20%. ²

4. Also, new rules now allow insured mortgages up to $1.5 million, meaning that for homes up to that price, you may put down less than 20%.¹

So if you were buying a home for $800,000, your minimum down payment would be:

1. 5% of the first $500,000 = $25,000

2. 10% of the remaining $300,000 = $30,000

3. Total down payment = $55,000

   
   

These rules apply to owner-occupied homes. But if your goal is to invest in a rental property, the picture shifts more.

Down Payment for Investment Properties / Rental Properties

For rental properties, lenders typically require a higher down payment—often 20% or more—because these are higher-risk loans.⁵ Also, mortgage default insurance (CMHC insurance) is not available for non-owner-occupied properties under standard rules.

Meanwhile, because of the change allowing insured mortgages up to $1.5 million, buyers can now put down as little as 5% on a home between $1 million and $1.5 million, something that was not possible before.³ This change expands possibilities, especially in high-cost markets like the GTA.

Why Putting Down More Than the Minimum Usually Helps

Putting down more than the minimum comes with benefits:

1. Avoiding mortgage default insurance

2. You only need mortgage default insurance if your down payment is less than 20%. That insurance protects the lender, not you—and it comes with costs.⁴

3. Lower monthly payments and interest paid

4. A larger down payment means you borrow less. Less borrowed means lower interest and payments over time.

5. Better negotiating power

6. Sellers and lenders see you as more stable with a bigger down payment.

So, if you can manage a 20% down payment, it's often worth it—even though it may feel harder initially.

New Mortgage Rule Changes That Help

Recent reforms are making it easier to get into the market with a smaller down payment:

1. As of December 15, 2024, the federal government increased the insured mortgage cap from $1 million to $1.5 million. That means more expensive homes can now qualify for lower down payments (under 20%) if they are insured.¹

2. Also, 30-year amortization options are being expanded to first-time buyers and buyers of new builds, which helps reduce monthly payments. (Federal mortgage reform) ¹

These changes give buyers and investors more flexibility in deciding how much down payment they need up front.

Example Scenarios in Ontario / GTA

Let's look at a couple of clean illustrations:

Purchase Price	Minimum Down Payment	Notes
$450,000 CAD	5% -> $22,500	Standard insured mortgage, default insurance applies
$900,000 CAD	5% of first $500,000 + 10% of $400,000 = $25,000 + $40,000 = $65,000	Now possible under updated rules
$160,000 CAD	20% -> $320,000	Must be a conventional mortgage (no insurance)

If you're buying for rental income, plan for 20%+ down payment. If you're buying to live in it, or for community purposes, the minimum formulas apply, but costs like mortgage insurance come into play.

Hidden Costs and What to Budget For

Your down payment is just one piece. You also need to budget for:

1. Closing costs (legal fees, land transfer tax, inspections)

2. Mortgage default insurance premiums (if your down payment is under 20%)

3. Upgrades or repairs

4. Property taxes, maintenance, insurance, and utilities

Always run pro forma cash flow models before committing.

How Regalway Homes Helps You Navigate Down Payment Decisions

If all of this feels overwhelming, that's normal. The right down payment depends on your goals, your cash, your risk tolerance, and the market. Regalway Homes helps with:

1. Coaching you through what down payment makes sense, given your goals

2. Structuring partnerships or group investments to reduce your individual burden

3. Helping you assess properties and make the math work

4. Guiding you to mortgage and finance options that mitigate cost

You don't have to figure it all out alone.

Final Thoughts

The down payment you need starts at as little as 5% (for many homes in Ontario) and escalates to 20% for higher values or investment properties. Recent changes to mortgage rules make it more flexible. But to make real estate work for passive income, you need a good strategy, solid analysis, and the right support.

Regalway Homes is here to help you start investing smartly. Visit www.regalwayhomes.com or schedule a consultation to map your path forward. Let's turn your real estate goals into reality.

Sources (AP Format)

1. Canada Department of Finance. (2024, September 16). Government announces boldest mortgage reforms in decades to unlock homeownership for more Canadians. Retrieved from Canada.ca

2. Canada.ca. (n.d.). How much you need for a down payment. Retrieved from Canada.ca

3. NerdWallet Canada. (2024). Everything You Need To Know About Canada's 2025 Housing Market. Retrieved from NerdWallet.com

4. PolicyAdvisor. (n.d.). Understanding Mortgage Insurance in Canada. Retrieved from PolicyAdvisor.com

5. FrankMortgage. (n.d.). Down Payment Requirements for Mortgages in Canada. Retrieved from FrankMortgage