Down payment and closing costs
How much you actually need — including every cost that comes due before you get the keys. With a full worked example for a $700,000 Toronto purchase.
Minimum down payment rules
Canada's minimum down payment rules changed on December 15, 2024. The insured mortgage cap rose from $1 million to $1.5 million, and 30-year amortizations became available to all first-time buyers (not just new build buyers). Here's the current structure:
For a $700,000 home, the minimum down payment works out to: 5% on the first $500,000 = $25,000, plus 10% on the remaining $200,000 = $20,000. Total minimum: $45,000. If you put less than 20% down, you'll also pay CMHC mortgage insurance — more on that in the mortgage basics guide.
The FHSA — the best savings account you might not have
The First Home Savings Account launched in April 2023. If you're a Canadian resident between 18 and 71 who hasn't owned a principal residence in the current calendar year or the four preceding years, you're eligible. It works like a hybrid of an RRSP and a TFSA: contributions are tax-deductible, growth is tax-free, and qualifying withdrawals to buy a home are also tax-free.
You can invest your FHSA contributions in stocks, ETFs, GICs, and other eligible investments — not just a savings account. The carry-forward rule means if you only contribute $5,000 in year one, you can contribute up to $11,000 in year two ($8,000 regular + $3,000 carry-forward). But carry-forward only goes one year back, so unused room beyond that disappears.
Best move: Open your FHSA immediately, even if you can only contribute a small amount. Once the account exists, your contribution room starts accumulating. You can transfer unused FHSA funds to an RRSP with no tax impact if you don't use them for a home purchase.
The RRSP Home Buyers' Plan
If you have money in an RRSP, you can withdraw up to $60,000 (raised from $35,000 in the April 2024 federal budget) tax-free under the Home Buyers' Plan. A couple can withdraw up to $120,000 combined. The catch: you have to repay the funds back into your RRSP over 15 years. If you miss a year's repayment, that amount gets added to your taxable income. The withdrawal funds must have been in the RRSP for at least 90 days before you withdraw them — you can't dump money in the week before closing. [verify current figures with a licensed agent or at realtor.ca]
Combined with the FHSA, a first-time buyer can access up to $100,000 per person ($40,000 FHSA + $60,000 HBP) tax-advantaged for a home purchase. For a couple, that's $200,000.
Land transfer tax in Ontario
Ontario charges land transfer tax (LTT) on every property purchase — see the full rate schedule on the Ontario Ministry of Finance site. Toronto buyers also pay a second, municipal land transfer tax (MLTT) on top of the provincial one. Both use similar bracket structures. Use the land transfer tax calculator on PropertyProperty.ca to calculate your exact amount.
| Purchase price | Ontario LTT rate | Toronto MLTT rate |
|---|---|---|
| First $55,000 | 0.5% | 0.5% |
| $55,001 – $250,000 | 1.0% | 1.0% |
| $250,001 – $400,000 | 1.5% | 1.5% |
| $400,001 – $2,000,000 | 2.0% | 2.0% |
| Over $2,000,000 | 2.5% | 2.5% |
First-time buyers in Ontario receive a rebate on the provincial LTT of up to $4,000 — which covers the full Ontario LTT on homes up to about $368,000. Toronto first-time buyers also receive a municipal rebate of up to $4,475, which covers the full MLTT on homes up to $400,000. Combined, Toronto first-time buyers can save up to $8,475.
Full worked example: $700,000 Toronto purchase
Purchasing a $700,000 home in Toronto as a first-time buyer
* CMHC PST applies only if your down payment is under 20%. On a $700K home with a 6.4% down payment ($45,000), CMHC insurance is approximately $25,150 (3.10% of the insured amount of $655,000). Ontario PST is 8% of that = ~$2,012, payable at closing. The CMHC premium itself is added to your mortgage.
Heads up: CMHC premium PST is the one closing cost most buyers don't see coming. It can't be rolled into the mortgage — you pay it in cash at closing. Factor it in early if your down payment will be under 20%.