How to Buy a Home with a Low Down Payment in the GTA
Buying a home in the GTA can feel daunting, especially if you’re concerned about saving for a large down payment. The good news is that there are options available that allow you to purchase a home with a low down payment. In this guide, we’ll explore how you can buy a home with minimal upfront costs while ensuring you make a smart financial decision.
Understanding Minimum Down Payment Requirements
In Canada, the minimum down payment depends on the purchase price:
5% for homes under $500,000
10% for the portion of the home price between $500,000 - $999,999
20% for homes priced at $1 million or more
If you’re a first-time homebuyer looking at Burlington real estate, Oakville real estate, Mississauga real estate, Hamilton real estate, Cambridge real estate, Milton real estate, Toronto real estate, a lower down payment option could help you enter the market sooner.
Government Programs to Help First-Time Buyers
1. First-Time Home Buyer Incentive (FTHBI)
A shared-equity mortgage program that provides 5% or 10% of the home’s purchase price.
Reduces your monthly mortgage payments.
Available for homes up to four times your qualifying income.
2. Home Buyers’ Plan (HBP)
Allows you to withdraw up to $35,000 tax-free from your RRSP.
Couples can combine withdrawals for up to $70,000 towards their down payment.
Must be repaid within 15 years.
3. Land Transfer Tax Rebates
Ontario offers a land transfer tax rebate of up to $4,000 for first-time buyers.
If purchasing Toronto real estate, an additional rebate on the municipal land transfer tax is available.
Low Down Payment Mortgage Options
1. CMHC-Insured Mortgages
If your down payment is less than 20%, you’ll need mortgage loan insurance from the Canada Mortgage and Housing Corporation (CMHC), Sagen, or Canada Guaranty.
Helps lenders approve buyers with lower down payments.
Premiums are added to your mortgage but allow you to enter the market sooner.
2. Alternative Lenders & Credit Unions
Some lenders offer flexible mortgage options for buyers with lower savings.
Credit unions may have lower minimum down payment requirements than traditional banks.
Ensure you compare interest rates and terms before committing.
Ways to Save for a Low Down Payment
Set up an automatic savings plan to build your down payment over time.
Reduce unnecessary expenses to increase your savings potential.
Consider a gifted down payment from family, which many lenders allow.
Final Thoughts
Buying a home with a low down payment is possible with the right strategy and financial support. Take advantage of government programs, explore mortgage insurance options, and work with an experienced real estate agent to find the best deal.
If you’re looking to buy a home in the GTA and need guidance on financing options, reach out today—We’d love to help you navigate the process!
