Down Payment and CMHC Insurance: What Ontario Buyers Need

Your down payment shapes everything about a mortgage: whether you need insurance, how big your payments are, and which homes you can buy. Here are the Canadian rules and what they mean for buyers in London and across Ontario.

Minimum down payment tiers

The Financial Consumer Agency of Canada sets out the minimum down payment by purchase price:

• Up to $500,000: 5% of the price
• $500,000 to $1.5 million: 5% of the first $500,000 plus 10% of the portion above $500,000
• $1.5 million or more: 20% of the price

For example, on a $600,000 home the minimum is $25,000 (5% of $500,000) plus $10,000 (10% of $100,000), for $35,000 in total. The minimum generally has to come from your own funds, and lenders may ask for more if you are self-employed or have weaker credit.

When you need mortgage default insurance

If your down payment is less than 20%, your mortgage must be insured. This protects the lender, not you, but you pay the premium. CMHC is one insurer. Per CMHC, the purchase price or lending value for a homeowner loan must be below $1,500,000. The cap was raised from $1,000,000 effective December 15, 2024. Note that some government pages still show the older $1,000,000 figure; the CMHC number is the current one we are relying on.

What the premium costs

CMHC premiums run from 0.60% to 4.50% of the loan amount, depending on your loan-to-value ratio. The less you put down, the higher the percentage. The premium is usually added to your mortgage balance, so it is repaid with interest over time. Ask your lender for the exact premium on your numbers, or check CMHC’s published cost table.

Ontario’s tax on premiums

This is where Ontario differs from many provinces. The FCAC notes that Ontario, Manitoba and Quebec charge provincial sales tax on mortgage loan insurance premiums. Your lender cannot add that tax to your mortgage, so it is paid in cash when the mortgage is arranged. Plan for it when you budget closing costs. The FCAC page does not list the rate, so confirm the amount with your lender.

Longer amortization for some buyers

Since December 15, 2024, first-time buyers and buyers of new builds with insured mortgages can choose a 30-year amortization. See our first-time home buyer programs guide for that and for the FHSA and Home Buyers’ Plan, which can help you build a down payment.

Budget beyond the down payment

A down payment is not your only upfront cost. Land transfer tax, legal fees and adjustments all land on closing day; our Ontario land transfer tax guide shows how that tax is calculated. If you plan to buy before selling, read whether to buy before you sell.

Next steps

• Get pre-approved so you know your actual numbers.
• Explore homes for sale and buyer resources and London neighbourhoods.
• If you are selling to buy, see what your home is worth with a free valuation.
• Questions? Talk to our team.

Worked example

Suppose you are buying a home in London for $600,000. The minimum down payment is $35,000, as calculated above, which is about 5.8% of the price. Because that is below 20%, your mortgage must be insured, and the premium is a percentage of the loan between 0.60% and 4.50% depending on your loan-to-value ratio. Ontario’s provincial sales tax on that premium is paid up front, in cash, rather than added to the mortgage. If you can raise your down payment to 20% ($120,000), insurance is not required, which removes the premium and the tax on it entirely. Your lender can show you the numbers for both options so you can compare your monthly payment and total cost.

This is general information, not mortgage or financial advice. Your lender or mortgage professional can confirm your exact requirements.