Hello, Future Homeowner! The Down Payment is Your Biggest Hurdle
Buying your first place in Ontario is one of the most exciting, intimidating things you’ll ever do. Forget the bidding wars for a minute; the absolute biggest hurdle for almost everyone is gathering enough cash for the down payment for first time home buyer in Ontario and covering the unavoidable closing costs.

The process has rules set by the federal government, but here in Ontario, we have specific provincial rebates that make a huge difference. This guide will walk you through the math, show you where to find the money using the newest home buyer incentives, and give you the confidence to take that crucial first step.

The Rule of Tiers: Calculating Your Minimum Down Payment

The amount of your down payment isn’t arbitrary—it’s dictated by the purchase price of the home you want to buy.Here are the required minimums:

Tier 1: Houses worth up to $500,000

If you want to buy a home that costs $500,000 or less, you need to put down at least 5% of the total price.

If you want to buy a $400,000 condo, your down payment must be at least $20,000.

Level 2: Houses From $500,001 to $1,499,999

This is the hard part because it needs a mixed calculation. You need to add 5% to the first $500,000 and then 10% to the rest.

For example, figuring out the down payment on a $700,000 house

To begin, take 5% of the first $500,000: $500,000×0.05=$25,000.

$700,000 minus $500,000 equals $200,000.

$200,000×0.10=$20,000 is 10% of the rest.

Add the two amounts together: $25,000 + $20,000 = $45,000.

Tier 3: Homes at $1,500,000 and Up

If the purchase price is $1,500,000 or more, the minimum down payment is a mandatory 20%. This is non-negotiable and requires a conventional mortgage.

A Note on Mortgage Insurance (CMHC)

If you put down anything less than 20% (Tiers 1 and 2), you must pay for mortgage default insurance (often called CMHC insurance). This premium is added to your mortgage amount and protects the lender, not you. A larger down payment for first time home buyer in Ontario—even if it’s 15% instead of 5%—will result in a lower premium, saving you interest over the life of the loan.

Unlock the Cash: Essential Home Buyer Incentives for Your Down Payment
You don’t have to save every single penny from your paycheck! The government offers incredible programs that directly help fund your down payment for first time home buyer in Ontario while offering massive tax advantages.

1. The First Home Savings Account (FHSA)

This is the new king of savings tools for first-time buyers. It’s a game-changer!

Tax Benefit: The FHSA is “tax-free in, tax-free out.” Your contributions are tax-deductible (saving you money on your income tax), and when you withdraw the funds (including the investment growth) for your first home, it’s all tax-free.

Contribution Limits: You can contribute up to $8,000 per year, with a total lifetime limit of $40,000.

The Power of Stacking: If you and your partner both qualify, you can open separate FHSAs, potentially accessing $80,000 in tax-advantaged savings for your down payment.

2. The Home Buyers’ Plan (HBP)

This federal program allows you to borrow from your existing retirement savings.

Withdrawal Limit: You can withdraw up to $60,000 (a limit increased recently!) tax-free from your Registered Retirement Savings Plan (RRSP) to use for your down payment.Couples can access up to $120,000.The Repayment Requirement: Unlike the FHSA, the HBP is a loan you must repay back into your RRSP over a 15-year period, starting the second year after withdrawal.Pro Tip: You can use both the FHSA and the HBP together to maximize the amount of tax-sheltered funds you put toward your home purchase.Reducing the Hit:

Ontario’s Land Transfer Tax Refund

The down payment for first time home buyer in Ontario is just the start. At closing, you have to pay the provincial Land Transfer Tax (LTT). Luckily, the government gives first-time buyers a significant break.The Provincial Land

Transfer Tax (LTT) Refund

Eligible first-time home buyers receive a refund on the provincial LTT up to a maximum of $4,000.

Impact: If your home’s purchase price results in an LTT of $4,000 or less (which is typically a home priced under $368,000), you pay zero provincial LTT. If the LTT is higher than $4,000, you simply get a $4,000 reduction on the final tax bill.

The Toronto Double-Dip

If you buy a home within the City of Toronto, you have to pay an additional Municipal Land Transfer Tax (MLTT). However, first-time buyers are also eligible for an additional MLTT rebate of up to $4,475.

Total Savings: If you purchase in Toronto and qualify for both, you could potentially save up to $8,475 on Land Transfer Tax, dramatically easing your closing costs.

Beyond the Down Payment: Budgeting for Closing Costs
Your down payment is money applied to the purchase price, but you need an additional chunk of cash—typically 1.5% to 4% of the purchase price—to cover the one-time fees due on closing day.

Here are the major closing costs you must budget for:

Legal Fees and Disbursements: This covers the lawyer’s professional fees, title searches, and registration costs. Budget between $1,500 and $3,000.

Mortgage Insurance PST: Even though the CMHC insurance premium is added to your mortgage, the Provincial Sales Tax (PST) on that premium must be paid upfront in cash in Ontario.

Property Tax and Utility Adjustments: These are prorated amounts to reimburse the seller for prepaid property taxes or utilities covering the period after the closing date.

Home Inspection Fee: While optional, a home inspection is highly recommended and costs typically $400 to $800.

Final Tally: When calculating the total cash you need, you must combine your down payment for first time home buyer in Ontario with all these essential closing costs.

Key Takeaways for the First-Time Buyer

Minimum Down Payment is tiered: 5% up to $500K, then 10% on the amount over that (up to $1.5M).

FHSA is your best friend: It offers tax-deductible contributions and tax-free withdrawals for your home purchase. Open one immediately to start your contribution room.

LTT Rebate: You get up to $4,000 off the provincial Land Transfer Tax in Ontario. Budget for the net amount after this rebate.

30-Year Amortization: Effective since late 2024, first-time home buyers buying new builds may now qualify for a 30-year insured mortgage amortization, which lowers your monthly payments.

Homeownership in Ontario is within reach. Start by calculating your exact minimum down payment for first time home buyer in Ontario, then build your savings plan around these powerful home buyer incentives.