“Save 5% and you can buy” only looks at the down payment (the part of the price you pay with your own money, not a loan). On closing day (when ownership transfers) other taxes and costs leave your account in cash. This post adds up, from official sources, what a first-time buyer needs in the bank. It is general information; confirm the real numbers with your bank, your lawyer and me.
The answer first: what leaves your account at closing
| Item | How much | Source |
|---|---|---|
| Down payment | 5% up to $500,000, 10% on the part from $500,000 to $1,500,000. 20% for homes of $1,500,000 or more | CMHC requirements |
| Ontario land transfer tax | 0.5% to 2.5% by price bracket. First-time buyers get up to $4,000 back | ontario.ca |
| Toronto municipal land transfer tax | Only inside the City of Toronto. Almost the same brackets as the province. First-time buyers get up to $4,475 back | toronto.ca |
| 8% Ontario sales tax on the mortgage insurance premium | With less than 20% down the mortgage is insured. The premium is added to the loan, but the 8% tax on it is paid in cash at closing | CMHC premium guide |
| Lawyer’s fee, registration, title insurance, adjustments | Varies by lawyer; get a quote early. Adjustments repay the seller for property tax or condo fees already paid ahead | — |
The deposit (the money you pay within days of your offer being accepted) is not an extra cost: it becomes part of your down payment. But the cheque goes out right after the offer, so have it ready first.
How the minimum down payment is calculated
Under CMHC (Canada Mortgage and Housing Corporation) requirements, the price cap for an insured mortgage is $1,500,000 and the minimum down payment is calculated in two parts: 5% of the first $500,000 and 10% of the part above that, up to $1,500,000. Homes above that cannot be insured, so you need 20%.
| Price | Minimum down payment | Calculation |
|---|---|---|
| $500,000 | $25,000 | $500,000 × 5% |
| $700,000 | $45,000 | $500,000 × 5% + $200,000 × 10% |
| $1,000,000 | $75,000 | $500,000 × 5% + $500,000 × 10% |
| $1,500,000 | $125,000 | $500,000 × 5% + $1,000,000 × 10% |
| $1,600,000 | $320,000 | $1,600,000 × 20% (cannot be insured) |
| Price | Minimum down payment |
|---|---|
| $500,000 | $25,000 |
| $700,000 | $45,000 |
| $1,000,000 | $75,000 |
| $1,500,000 | $125,000 |
| $1,600,000 | $320,000 |
Above $1,500,000 the mortgage cannot be insured and 20% is required, so a $100,000 higher price adds $195,000 to the down payment. Same calculation as the table above.
Source: CMHC, General requirements for mortgage loan insurance (checked Oct 30, 2026). Bars start at zero.
With less than 20% down, mortgage insurance applies. The premium is 2.80% to 4.00% of the loan depending on the loan-to-value ratio (3.00% to 4.20% with a 30-year amortization) and is added to the principal. A 30-year insured mortgage (CMHC Home Start) is only for first-time buyers or newly built homes.
Land transfer tax: twice inside the City of Toronto
Ontario land transfer tax is charged in brackets: 0.5% up to $55,000, 1% up to $250,000, 1.5% up to $400,000, 2% up to $2,000,000 and 2.5% above that. Inside the City of Toronto, the municipal land transfer tax is charged again with the same bracket structure (higher rates at the top end). Vaughan, Markham, Richmond Hill and Mississauga pay only the provincial tax.
First-time buyers get back up to $4,000 of the provincial tax and up to $4,475 of the Toronto tax. The conditions: you are at least 18, you have never owned a home anywhere in the world (and neither has your spouse while they were your spouse), you are a Canadian citizen or permanent resident, and you move in as your principal residence within 9 months of closing. Your lawyer usually applies the refund at closing.
Worked example: a $700,000 condo in the City of Toronto, first home
These are reference estimates using the official rates. Legal fees and adjustments are not included.
| Item | Amount | Calculation |
|---|---|---|
| Minimum down payment | $45,000 | $500,000 × 5% + $200,000 × 10% |
| Ontario land transfer tax | $10,475 | $275 + $1,950 + $2,250 + $6,000 |
| First-time refund (Ontario) | −$4,000 | Maximum |
| Toronto municipal land transfer tax | $10,475 | Same brackets |
| First-time rebate (Toronto) | −$4,475 | Maximum |
| Mortgage insurance premium ($655,000 loan × 4.00%) | $26,200 | Added to the loan — not cash |
| 8% sales tax on the premium | $2,096 | Cash at closing |
| Cash needed at closing (before legal fees) | about $59,600 | $45,000 + $6,475 + $6,000 + $2,096 |
- about $59,600$700,000 condo in the City of Toronto, first home — cash at closing (before legal fees, hypothetical example)
- about $53,600The same home in Vaughan or Markham (no municipal tax)
- $26,200Mortgage insurance premium — added to the loan, not cash
| Item | Amount |
|---|---|
| Down payment | $45,000 |
| Ontario land transfer tax (after refund) | $6,475 |
| Toronto land transfer tax (after rebate) | $6,000 |
| 8% sales tax on the premium | $2,096 |
About three quarters of the cash is the down payment; the rest is tax. The bars show the numbers from the table above.
If the same home were in Vaughan or Markham, there would be no municipal tax ($6,000), so about $53,600. Add the lawyer’s fee, title insurance, registration, property tax and condo fee adjustments, and moving costs on top.
Benefits a first-time buyer should claim
- Land transfer tax refunds (Ontario up to $4,000, Toronto up to $4,475) — applied at closing if you meet all the conditions above.
- For a new home, the First-Time Home Buyers’ GST rebate — if you sign for a new home priced $1,000,000 or less after March 19, 2025 and before 2031, as your first home and principal residence, you get back the GST you paid, up to $50,000. Between $1,000,000 and $1,500,000 the amount shrinks, and above that there is none (federal Excise Tax Act, s. 254).
- FHSA (First Home Savings Account) and HBP (withdrawing from your RRSP) — tax-advantaged ways to save the down payment. Check the limits and conditions with the Canada Revenue Agency.
- A 30-year amortization on an insured mortgage (CMHC Home Start) — only for first-time buyers or new homes. Lower monthly payments, but more total interest.
Common mistakes
- Saving only the down payment and forgetting land transfer tax — for a $700,000 home in the City of Toronto, that is $12,475 more even after the refunds.
- Treating the deposit as an “extra cost” — it is part of the down payment, but the cheque goes out right after the offer, so have it ready.
- Looking at homes without a pre-approval — Canada has a stress test (you are assessed at a higher rate than your real rate), so you may be able to borrow less than you think.
- Keeping exactly the right amount in the account on closing day — adjustments and legal fees are finalized only days before closing. Leave a cushion.
Sources (open the originals)
- CMHC, General requirements to qualify for mortgage loan insurance — checked Oct 30, 2026
- CMHC, Mortgage loan insurance costs — checked Oct 30, 2026
- Ontario, How to calculate land transfer tax — checked Oct 30, 2026
- Ontario, Land transfer tax refund for first-time home buyers — checked Oct 30, 2026
- City of Toronto, Municipal land transfer tax rates — checked Oct 30, 2026
- City of Toronto, Municipal land transfer tax rebate — checked Oct 30, 2026
- Excise Tax Act s. 254 — First-Time Home Buyers’ GST rebate on new homes — checked Oct 30, 2026
About the author
Joonghyun Ahn is a Sales Representative with HomeLife Frontier Realty Inc., Brokerage, based in Thornhill and serving the whole GTHA. Every post is general information, not legal, tax or financial advice. Check with a professional before you decide.