Short answer
The federal minimum on a $1.2 million purchase is $95,000: 5% of the first $500,000 plus 10% of the remaining $700,000, provided the mortgage and property qualify for insurance.
The concern behind the question
A buyer applies a flat 5% to the whole price and expects to need $60,000. That creates a $35,000 down-payment gap before land transfer tax, legal expenses, adjustments and appraisal risk are considered.
What the official rule says
For homes from $500,000 up to the insured-price limit, the minimum down payment is 5% on the first $500,000 and 10% on the portion above $500,000.
What the headline does not tell you
The minimum is not the same as cash required to close. Insurance premium tax, land transfer tax, legal fees, adjustments and a low appraisal can add substantially. The lender or insurer may require more down payment because of the borrower or property risk.
A practical Ontario example
Illustration only: At $1.2 million: $500,000 × 5% equals $25,000, and $700,000 × 10% equals $70,000, for $95,000 total. If the accepted appraisal is $1.15 million, the financing may be based on the lower value and the client may need additional cash.
Practical options to review
Verify the down-payment source and 90-day trail before writing the offer. Avoid unexplained transfers or borrowed funds that the lender has not approved. Keep a separate closing-cost reserve instead of using every available dollar as the deposit.
Before relying on the rule
- Confirm the announcement and effective dates against the official source.
- Identify whether the transaction is insured, conventional, a straight switch, a refinance or a tax claim.
- Separate verified facts from assumptions about income, property value, occupancy and available funds.
- Check the lender’s and insurer’s current policy; a government program does not guarantee mortgage approval.
- Compare the cash-flow benefit with premiums, interest, taxes, fees and the exit plan.
Rajiv’s broker perspective
A rule should answer only the question it was designed to answer. It may expand eligibility without solving appraisal, income, credit or closing-fund problems. I would first identify the client’s real concern, verify the dates and documents, and then compare the practical A, alternative/B, MIC or private routes only where they genuinely apply.
Unsure how this rule fits your purchase or renewal? Request a mortgage strategy second opinion with Rajiv.