A practical, accurate guide to the actual money needed to purchase a home in Ontario. No oversimplification. Everything a buyer actually needs to know.
Most buyers focus on the down payment first - and rightly so. The minimum you need depends on the purchase price, and the rules change once you move above $500,000 and $1.5 million.
$25,000 (5% of first $500K) + $30,000 (10% of remaining $300K) = $55,000 minimum down payment
If your down payment is under 20%, lenders require mortgage default insurance through CMHC, Sagen, or Canada Guaranty. The premium is added to your mortgage, not paid upfront - but it does increase your total borrowing cost.
These are not the same thing.
Ontario charges a provincial land transfer tax. Toronto buyers also pay a municipal land transfer tax, which effectively doubles the amount. These are due on closing and must be in your budget.
This surprises more buyers than almost any other cost.
Beyond the down payment and land transfer tax, budget for these additional costs.
Your mortgage payment is not your housing cost. The actual monthly cost of ownership includes:
Condo fees reduce how much mortgage you qualify for - often significantly.
Two buyers with identical income and credit. One buys a freehold townhouse. One buys a condo with $900/month fees. The condo buyer may qualify for materially less mortgage.
You do not qualify at the rate your lender offers you. You qualify at the higher of:
Example:
This is designed to ensure borrowers can handle rate increases. The practical effect is that buyers qualify for roughly 20% less mortgage than they would without the stress test.
The amortization period is the total length of time to pay off the mortgage.
Most mortgages allow you to make extra payments without penalty, within limits. Common structures:
Most lenders prefer credit scores of 680 or higher for the strongest financing options. Below 680, fewer lenders are available and rates may be higher.
Qualification is straightforward - lenders use your base income, verified with a letter of employment and recent pay stubs.
Lenders typically average the last 2 years of income from your tax returns. A great year followed by a bad year results in a lower average - not the higher number.
If you are selling one home and buying another and the closing dates do not align, you may need bridge financing.
A 30-day bridge on $200,000 at 8% costs approximately $1,300. Plan your closing dates carefully to minimize bridge financing costs.
Lenders require documentation of where your down payment came from.
Pre-construction purchases carry costs and risks that resale purchases do not.
Can be capped in the agreement or passed through to the buyer - read the agreement carefully.
In condos, you may be required to move in and pay occupancy fees (similar to rent) before the building is registered and you actually take title. This can last months.
Frequently misunderstood and can be a five-figure surprise. See the HST section for full details.
Pre-construction agreements sometimes allow (or prohibit) selling your unit before closing. If you need to exit, confirm whether assignment is permitted and what fees apply.
New builds are routinely delayed. Factor this into your financial and housing plan.
Builder upgrades are typically marked up significantly. Costs add up quickly.
Minimum down payment (5%) $25,000 CMHC insurance premium (added to mortgage) $19,000 Land transfer tax after provincial rebate ~$2,475 Legal fees and title insurance ~$2,000 Home inspection ~$500 Moving costs ~$1,000 Estimated total cash needed at closing ~$31,000 to $35,000 Emergency buffer (recommended) $10,000+
Minimum down payment $55,000 Land transfer tax after provincial + municipal rebates ~$16,475 Legal fees and closing costs ~$4,000 to $5,000 Estimated total cash needed at closing ~$75,000 to $90,000 Emergency buffer (recommended) $15,000+
Minimum down payment (20%) $300,000 Land transfer tax (no rebate available at this price) ~$56,450 Legal fees and closing costs ~$5,000 to $7,000 Estimated total cash needed at closing ~$360,000 to $375,000
Saving only for the down payment - closing costs, land transfer tax, and HST (on new builds) catch people off guard
Using every dollar available - leaving no emergency fund after closing is high risk
Getting a pre-approval and assuming it is guaranteed - a pre-approval is not a commitment; employment changes, new credit, and appraisal shortfalls can kill a deal
Ignoring condo fees - a high condo fee can reduce your qualification by six figures
Not stress-testing the monthly payment - use the actual rate plus 2% and test it against your real monthly budget, not just the lender's calculation
Buying at the maximum qualification amount - just because a lender will approve it does not mean you can comfortably afford it
Missing the IRD penalty risk - breaking a fixed mortgage early can cost more than the savings from refinancing
Skipping the home inspection - waiving inspections to compete on offers is common in hot markets but carries real financial risk
Not comparing prepayment privileges - two mortgages at the same rate can have very different total costs depending on flexibility
Applying for new credit during the purchase process - this can change your qualification or delay closing
Down payment fully documented and sourced
Closing cost buffer in place (separate from down payment)
Emergency fund remaining after closing
FHSA opened and funded as early as possible
RRSP HBP strategy confirmed with an accountant
Mortgage pre-approval completed with rate hold
Credit score reviewed and any issues addressed
Income documents organized (NOAs, T4s, pay stubs, letter of employment)
Monthly affordability tested at the stress test rate, not the contract rate
New construction HST implications confirmed with a lawyer
Bridge financing plan in place if selling and buying simultaneously
You've already done the hard part - you understand the numbers. Now let's make sure your next move is the right one.
Whether you're buying your first home or your fifth, I'll make sure you go in with full clarity - on the costs, the process, and the strategy.
Ready to talk through your situation? Let's connect and map out your path to ownership.
Ilan Portnoi
📞 (647) 694-2532
✉ ilan@portnoiteam.com
🌐 portnoiteam.com
👉 Book your free 30-min call
The Real Cost of Buying a Home in Ontario - 2026 Edition