Pre-approval, not a verbal claim
A true pre-approval is a formal lender review of your income, credit, and down payment. This process gives you a confirmed maximum purchase price and a rate hold that usually lasts 90 to 120 days. Without it, your offer carries weight only as far as your verbal claim. Our team times your offer strategy around this pre-approval to ensure you buy with absolute certainty. Always speak with your mortgage professional to finalize your numbers.
Down payment minimums in Canada
The required cash upfront scales with the purchase price. For homes under $500,000, the minimum is 5%. For a purchase between $500,000 and $1.5 million, you need 5% on the first $500,000 and 10% on the remaining portion. For homes priced at $1.5 million or more, a flat 20% minimum applies.
Mortgage default insurance
Insurance from CMHC or private insurers is required anytime your down payment is less than 20%, and it is not available on homes of $1.5 million or more. The premium is added directly to your loan amount: 4.00% with a 5% to 9.99% down payment, 3.10% with 10% to 14.99% down, and 2.80% with 15% to 19.99% down. An extra 0.20% is added if your amortization is longer than 25 years. Ontario also charges an 8% sales tax on this premium, which must be paid in cash at closing.
A realistic insurance example
On a $1,000,000 purchase, the minimum down payment is $75,000, leaving a loan of $925,000. Because the down payment is under 10%, the 4.00% premium equals $37,000, which is added to the mortgage. The 8% provincial sales tax on that premium is $2,960 — this is due in cash on closing day.
The stress test and amortization
Buyers must qualify at the stress test rate, which is the higher of their contract rate plus 2%, or the 5.25% floor. The standard amortization is 25 years, though a 30-year option is available to first-time buyers and on newly built homes. Your lender will guide you through exactly how this impacts your monthly payment.
Land transfer tax · the Toronto double-hit
Toronto buyers pay both the Ontario tax and the Toronto municipal tax. On a $1,000,000 home, that is $16,475 for the province and $16,475 for the city, totaling $32,950. First-time buyers who qualify get back up to $4,000 of the Ontario tax and up to $4,475 of the Toronto tax, meaning $8,475 back together. Calculate your closing cash.
Fixed versus variable rates
A variable rate can offer flexibility, while a fixed rate provides absolute certainty. The right answer depends entirely on your holding period and personal risk appetite. A licensed mortgage professional will run both scenarios to help you decide the best path forward before we submit an offer.
Bridge financing
This is a short loan against the equity in the home being sold, used when your purchase closes before your sale. Lenders want the sale to be firm before approving this. Terms vary by lender, so rely on your mortgage professional to confirm the exact costs. It is a highly useful tool to bridge the gap between dates.
