How Much Down Payment Do You Really Need for a TD Mortgage?

Minimum Down Payment Rules in Canada

Before you start house hunting, you’ll need to know the minimum down payment required by Canadian mortgage rules. For a home priced at $500,000 or less, the minimum is 5% of the purchase price. If the home costs between $500,000 and $1.5 million, the minimum is 5% of the first $500,000 plus 10% of the portion above $500,000. For homes priced at $1.5 million or more, the minimum jumps to 20%.

These rules apply regardless of which lender you choose, including TD. Your down payment directly affects how much you need to borrow and whether you need mortgage loan insurance.

• 5% minimum for homes up to $500,000
• 5% of first $500,000 + 10% of the amount above $500,000 for homes between $500,000 and $1.5 million
• 20% minimum for homes $1.5 million or more

Sources: Government of Canada

How Down Payment Affects Mortgage Payment

A larger down payment reduces the amount you borrow, which directly lowers your mortgage payments and the total interest you pay over the life of the loan. It can also save you thousands of dollars, especially if it avoids mortgage loan insurance.

The table below shows how different down payment levels affect the cost of a $400,000 home. Notice that a larger down payment reduces both the mortgage loan insurance premium and the total cost of the home.

• Larger down payment means a smaller mortgage and lower interest charges.
• A down payment under 20% usually requires mortgage loan insurance.
• Insurance premiums range from 0.6% to 4.5% of the mortgage amount, and the bigger your down payment, the less you pay.

Sources: Government of Canada

Down Payment Savings Strategies and Timelines

Saving for a down payment takes time and discipline. There is no one-size-fits-all timeline, but setting a target based on the home price you’re aiming for and your monthly saving capacity is a practical first step.

Consider breaking your goal into smaller milestones. Automating transfers to a separate savings account can help you stay on track. Adjust your timeline as your income and expenses change.

• Calculate your target down payment amount.
• Set up automatic transfers to a dedicated savings account.
• Review your budget to find areas to cut back.
• Track your progress regularly to stay motivated.
• Consider accelerating your savings with occasional lump-sum contributions.

1. Determine the minimum down payment for the home price range you’re targeting.
2. Set a savings goal that includes the down payment plus closing costs.
3. Create a monthly budget that allocates a specific amount to savings.
4. Automate that savings transfer right after payday.
5. Monitor your progress and adjust your plan if needed.

Gifted down payments

Many homebuyers receive financial help from family members. Policies on gifted down payments can vary among lenders and may depend on your relationship to the gift giver and the specific requirements of the lender.

If you plan to use a gifted down payment, it’s best to check with your lender early to understand their rules. You may need to provide documentation, such as a gift letter, but specific requirements are not standardized across all lenders. Also, if you are self-employed or have a poor credit history, the lender may require a larger down payment than the minimum.

• Gifted down payment policies vary by lender.
• Documentation requirements, such as a gift letter, may apply.
• Borrowed money may not be accepted as a down payment.
• If you have a poor credit history or are self-employed, a larger down payment may be required.

Sources: Government of Canada

Down Payment Assistance Programs

Several federal and provincial programs exist to help Canadians with their down payment, but the details vary by program and personal circumstances. One such program is the Home Buyers' Plan (HBP), which is designed to help first-time homebuyers use RRSP savings, but the specific rules and limits were not part of the evidence gathered for this page.

For the most current and personalized information, it’s best to consult official government resources or speak with a mortgage advisor. The Government of Canada provides financial tools, including a mortgage calculator, to help you plan your mortgage.

• The Government of Canada provides financial tools, including a mortgage calculator, to help plan your mortgage.
• Provincial programs may offer assistance, but availability and terms vary.
• Always confirm eligibility criteria before relying on any assistance program.

Sources: Government of Canada

TD Mortgage Tools and Calculators

TD offers a range of online tools to help you plan your mortgage, but specific features or links to TD’s calculator were not included in the research for this page. However, you can use the Government of Canada’s mortgage calculator to estimate your payments based on different down payment amounts.

Using a mortgage calculator is a smart way to see how different down payment scenarios affect your monthly payments and total interest. Input the home price, down payment, interest rate, and amortization period to get a clear picture of what you can afford.

• Use online mortgage calculators to compare down payment scenarios.
• TD’s website may have a dedicated calculator, but the Government of Canada’s tool is also reliable.

Sources: Government of Canada