How much down payment do I need to buy a home in Ontario?
Are you wondering how much down payment you need to buy a home in Ontario — and what that means for sellers in Georgetown? Here’s the straightforward answer that’ll let you act fast and smart.
Quick, No-Fluff Answer
- For homes up to $500,000: minimum 5% down.
- For homes between $500,000 and $999,999: 5% on the first $500,000 + 10% on the portion above $500,000.
- For homes $1,000,000 and up: minimum 20% down.
Those rules are set at the federal level and apply across Ontario. Mortgage default insurance (CMHC/Genworth/Canada Guaranty) is required when the down payment is under 20%.
Why This Matters for Georgetown Sellers
Georgetown sits in Halton Hills — a market where list prices often push buyers into the middle band ($500k–$999,999) or above. That simple fact changes who can make clean, strong offers.
If your asking price crosses those thresholds, a lot of buyers will need a higher down payment or mortgage insurance. That affects:
- Offer strength: Buyers with 20% down make faster, stronger offers.
- Conditional risk: Buyers with small down payments are likelier to rely on financing conditions and appraisals.
- Closing reliability: Mortgage default insurance helps approval but can complicate lender timelines.
The Mechanics — Exact Minimum Down Payment Rules (Short & Clear)
- Purchase Price ≤ $500,000 — minimum 5% down.
- Purchase Price $500,001–$999,999 — 5% on first $500,000 + 10% on amount above $500,000.
- Purchase Price ≥ $1,000,000 — minimum 20% down.
Example: For a $750,000 home: 5% of $500,000 = $25,000. Plus 10% of $250,000 = $25,000. Total minimum down = $50,000 (≈6.67%).
Mortgage Insurance — What Sellers Should Know
- If buyer puts down less than 20%, mortgage default insurance is mandatory.
- It protects the lender, not the seller. But it increases approval odds for the buyer.
- The insurance premium can be added to the mortgage amount — so a buyer might offer the right price and still finance mortgage insurance into the loan.
As a seller, you don’t get paid differently when mortgage insurance is involved. But you should care because it affects buyer qualification, timing, and financing reliability.
Mortgage Stress Test — The Reality Behind Approvals
Lenders require buyers to qualify under a stress test: the lender calculates payments using a higher qualifying rate to ensure the buyer can handle rate increases. That reduces the maximum mortgage a buyer can get.
Practical effect for sellers: a buyer who looks qualified at current rates might not pass the stress test — especially if they’re using minimal down payment. That creates failed financing conditions or demands for price concessions.
Tip: Ask to see lender pre-approval that includes the stress-test qualifying rate. A plain pre-approval without stress test confirmation is not enough.
Smart Seller Playbook for Georgetown Homes
- Price with buyer pools in mind
- If you price under $500k, you open the 5% down buyer pool.
- Above $500k, the buyer pool shrinks; above $1M it’s much smaller and more cash/large-down buyers dominate.
- Require strong proof of funds and lender pre-approval
- Ask for a lender pre-approval with the qualifying rate listed and a recent bank statement or investment statement for the down payment source.
- Use the right conditional language
- Keep a financing condition when needed, but set tight timelines. 7–10 business days for finance conditions is reasonable.
- Favor buyers with larger down payments (if speed and certainty matter)
- Offers with 20%+ down close faster, avoid mortgage insurance and inspection/financing complexities.
- Understand timelines for insured mortgages
- Insured purchases can still take longer if lenders require extra documentation. Expect 10–14 days for standard financing conditional removals when mortgage insurance is involved.
How Buyers in Georgetown Typically Meet Down Payment Requirements
- Personal savings: The most common source. Sellers should ask for bank statements showing the funds are seasoned.
- Gifted funds: Permitted if documented with a gift letter. Lenders require a clear paper trail.
- Sale of another property: Proof of closing or firm sale agreement is needed.
- Borrowed funds: Some lenders allow, but it affects qualification — lenders will look at payment obligations.
As a seller, insist on documentation. Vague claims about “savings” are not acceptable.
Real-World Examples: What Offers Look Like Here
- Offer A — 5% down on $480,000: fast to close, insured mortgage, buyer passes stress test. Low risk.
- Offer B — 5% down on $760,000: requires 10% on portion above $500k, higher insured mortgage, more paperwork. Moderate risk.
- Offer C — 20% down on $1,100,000: no mortgage insurance, strong cash position, high chance of clean close.
Sellers should weigh price vs. certainty. A slightly lower offer with 20% down may be safer than a higher offer with financing risk.
Negotiation Levers Sellers Can Use
- Ask for a larger deposit: Shows buyer skin in the game.
- Request unconditional offers if buyer has proof of 20%+ down.
- Shorten finance condition timelines.
- Include a clause that the buyer’s financing must be conventional (no private or unverified lending) if you want cleaner closings.
Local Market Notes for Georgetown, ON
- Georgetown buyers often commute to Toronto or nearby employment hubs. That affects their down payment capacity and loan types.
- Proximity to transit and schools pushes prices into bands where buyers need more than 5% down. You’ll see more financed purchases with mortgage insurance in the mid-range.
- Local inventory shortages increase competition; when multiple offers show, buyers with larger down payments often win.
How I Help Sellers Win (Practical, Not Fluffy)
I screen buyers aggressively so your sale doesn’t stall. I verify pre-approvals, proof of funds, and the nature of the down payment. I recommend the deposit size, conditional timelines, and contract language that minimize risk and keep you in control.
Contact: Tony Sousa — tony@sousasells.ca | 416-477-2620 | https://www.sousasells.ca
FAQ — Clear Answers Sellers and Buyers in Georgetown Need
What is the minimum down payment in Ontario?
Minimums: 5% up to $500k; 5% first $500k + 10% on $500k–$999,999; 20% on $1M+.
Does a buyer need mortgage insurance if the down payment is under 20%?
Yes. Mortgage default insurance is required for insured mortgages when down payment is under 20%.
Can the down payment be a gift?
Yes, but lenders require a gift letter and documentation. The donor must typically confirm no expectation of repayment.
How does down payment size affect my sale as a seller?
Larger down payments reduce financing risk, speed closing, and improve offer reliability. Smaller down payments increase the chance of financing conditions and delays.
Should I accept an offer with a finance condition?
It depends. If the buyer has a recent lender pre-approval (with stress-test evidence) and proof of funds, a short finance condition can be OK. If not, press for stronger terms.
How long does financing approval usually take?
Typical conditional removal for mortgage approvals runs 7–14 business days. Insured mortgages can require extra documentation and take a bit longer.
What should I ask for to verify a buyer’s down payment?
- Recent bank or investment statements showing funds.
- Proof of sale for another property if applicable.
- A lender pre-approval that shows the qualifying rate.
- Gift letter if funds are gifted.
Do closing costs differ for buyers and sellers?
Yes. Buyers pay land transfer tax, legal fees, and adjustments. Sellers pay real estate commissions and their legal fees. These affect net proceeds and buyer affordability.
How can I make my listing attract stronger-downpayment buyers?
Price competitively in the bracket that attracts buyers with the down payment profile you want. Highlight property features that appeal to higher-income buyers (proximity to transit, finished basements, upgrades, lot size).
Final Word — Make Certainty Your Objective
Price and timing are important. But when selling in Georgetown, certainty wins. A slightly lower guaranteed sale beats a higher price that falls apart on financing.
If you want a no-nonsense review of your listing strategy, buyer pool, and the types of offers you should expect — contact Tony Sousa. He’ll tell you exactly what buyers will bring to the table and how to lock a clean close.
Contact: tony@sousasells.ca | 416-477-2620 | https://www.sousasells.ca
