Saving for a down payment in Toronto starts with knowing your target: at least $75,000 for a $1 million bungalow, plus closing costs. The fastest route combines a First Home Savings Account, the RRSP Home Buyers’ Plan and an automated monthly savings plan. Here’s how to build it, step by step.
Key takeaways
- The minimum down payment is 5% on the first $500,000 and 10% on the rest up to $1.5 million.
- Save for closing costs too, especially Toronto’s double land transfer tax.
- An FHSA gives you a tax deduction now and tax-free withdrawals later.
- Automating your savings beats trying to save what’s left at month end.
How much do you need for a down payment in Toronto?
Your minimum depends on price. Here’s what common bungalow price points require as of September 2026:
| Purchase price | Minimum down payment | 20% down (no insurance) |
|---|---|---|
| $650,000 | $40,000 | $130,000 |
| $800,000 | $55,000 | $160,000 |
| $1,000,000 | $75,000 | $200,000 |
| $1,200,000 | $95,000 | $240,000 |
For context, the GTA’s median sale price in August 2026 was $850,000, according to TRREB. Bungalows inside Toronto often sit above that.
Don’t forget closing costs
Lenders want to see closing costs saved on top of your down payment. A common rule of thumb is 1.5% to 4% of the price. In Toronto, you pay both Ontario and municipal land transfer tax, so aim for the higher end.
Should you put down 5% or 20%?
With less than 20% down, you pay mortgage default insurance. At 5% to 9.99% down, the common premium is 4.0% of the mortgage, added to your balance. On a $745,000 mortgage, that’s $29,800.
Waiting to save 20% avoids the premium, but prices and rents keep moving while you wait. Many buyers choose the minimum, buy sooner and pay the premium. Others put down what they have and keep a cushion. Run both scenarios with a mortgage agent before you decide.
There’s also a middle ground. The insurance premium shrinks as your down payment grows, so moving from the minimum to 10% or 15% down can still cut the cost noticeably, even if 20% is out of reach.
Use the right accounts
First Home Savings Account (FHSA)
You can contribute $8,000 a year, up to $40,000 in your lifetime. Contributions are tax-deductible, and qualifying withdrawals are tax-free. Unused room carries forward, up to $8,000, so you could put in $16,000 in one year. A couple can each have one.
RRSP Home Buyers’ Plan
Each first-time buyer can withdraw up to $60,000 from their RRSP, or $120,000 per couple. You repay it over 15 years. You can combine the HBP with your FHSA for the same purchase.
TFSA
Once your FHSA is maxed for the year, a TFSA is a flexible place for extra savings. Growth is tax-free, and you can withdraw any time.
See every program in our guide to first-time home buyer incentives in Ontario.
A step-by-step down payment savings plan
- Pick a target price. Browse real listings, such as bungalows for sale under $1 million, to set a realistic goal.
- Calculate your total. Add the down payment and closing costs.
- Set a timeline. Divide the gap by the number of months until you want to buy.
- Automate it. Schedule transfers to your FHSA and savings on payday.
- Match the investment to the timeline. If you’ll buy within a few years, keep savings in low-risk options. Talk to a financial advisor about what fits.
- Review every quarter. Adjust as your income, rent or target price changes.
Ways to reach your goal faster
- Cut one big cost. Rent, car payments and subscriptions add up faster than coffee runs.
- Put windfalls to work. Tax refunds, bonuses and raises can go straight to savings. Your FHSA deduction can create a refund to reinvest.
- Accept a gift. Family gifts are a common source of down payment funds. Lenders will want a signed gift letter and proof of the transfer.
- Look beyond Toronto. Bungalows in Durham Region, Hamilton or Simcoe can need a smaller down payment and skip the municipal land transfer tax.
- Buy with income potential. A bungalow with a legal basement unit can help you carry the mortgage.
Bungalow tip: Lenders usually want to see your down payment sitting in your accounts for a few months, with a clear paper trail. Avoid large unexplained deposits right before you apply.
Down payment mistakes to avoid
- Spending your whole savings on the down payment and leaving nothing for closing or repairs.
- Taking on a car loan or new credit card debt while saving, which shrinks what you qualify for.
- Investing short-term savings in volatile assets right before you plan to buy.
Frequently asked questions
How much should I save to buy a bungalow in Toronto?
For a $1 million bungalow, plan for at least $75,000 down plus closing costs, including Toronto’s double land transfer tax. More savings give you a lower payment and a safety cushion.
Can I use a gift for my down payment?
Yes, gifts from immediate family are usually accepted. The lender will ask for a signed gift letter confirming the money doesn’t need to be repaid.
Can I use both an FHSA and RRSP for my first home?
Yes. You can withdraw from both for the same qualifying purchase, which can greatly increase your down payment.
Where should I keep my down payment savings?
If you’re buying soon, keep the money in low-risk, easy-to-access options. Speak with a financial advisor about the right mix for your timeline.
The bottom line on saving for a down payment
A Toronto down payment is a big number, but it’s a reachable one with a clear target, the right accounts and automatic saving. Start your FHSA early, track your progress, and set up new-listing alerts so you’re ready to move when you hit your goal.
