For most first time home buyers in Ontario, the biggest obstacle to purchasing a home isn’t qualifying for a mortgage. It’s pulling together the down payment.

With rising home prices across the GTA, Halton, Hamilton, and surrounding areas, many buyers assume they must save every dollar on their own. In reality, most first time buyers use a combination of savings tools and family assistance to reach the required amount.

Outside of your own savings,  there are three common and effective down payment sources I see as a mortgage agent are the First Home Savings Account (FHSA), the RRSP Home Buyers’ Plan, and gifted funds from family.

Understanding how these work can significantly speed up your path to home ownership.

The First Home Savings Account (FHSA)

The FHSA is one of the most powerful tools ever introduced for first time buyers in Canada.

It combines features of both an RRSP and a TFSA.

You can contribute up to $8,000 per year, with a lifetime maximum of $40,000. Contributions are tax deductible, meaning they reduce your taxable income, and withdrawals used toward the purchase of your first home are completely tax free.

For couples, this can mean up to $80,000 available for a down payment.

From a mortgage perspective, FHSA funds are treated as your own savings once withdrawn properly. Lenders simply require proof of contribution history and confirmation the withdrawal meets CRA guidelines.

Many buyers are now using the FHSA as their primary down payment vehicle, especially those planning to buy within the next three to five years.

Using RRSPs Through the Home Buyers’ Plan

The RRSP Home Buyers’ Plan has been helping first time buyers for decades and remains extremely effective.

Eligible buyers can withdraw up to $60,000 from their RRSPs, tax free, to purchase a first home. Couples can access up to $120,000 combined.

Unlike the FHSA, RRSP withdrawals must be repaid over time. Repayment typically begins in the second year after purchase and is spread over up to 15 years.

If repayments are missed, the required amount is added back into your taxable income for that year.

From a mortgage qualification standpoint, RRSP funds used under the Home Buyers’ Plan are treated as legitimate down payment dollars as long as the funds are in the account for at least 90 days prior to withdrawal.

This is one of the most common strategies buyers use to supplement savings or reduce how much they need to borrow.

Gifted Down Payments From Family

Gifted down payments are extremely common in Ontario, especially with first time buyers entering higher-priced markets.

Most lenders allow gifted funds from immediate family members such as parents, grandparents, or siblings.

The key requirements are straightforward:

A signed gift letter is required
The money must be deposited into the buyer’s account before closing

Gifted funds can be used for part or all of the down payment. In many cases, they can also help cover closing costs.

From the lender’s perspective, gifted funds reduce risk because they are non-repayable and do not create new monthly debt obligations.

Combining All Three Strategies

Many first time buyers do not rely on just one source.

A very common structure looks like this:

FHSA savings for the base down payment
RRSP withdrawals to increase purchasing power
A family gift to cover the remaining shortfall or closing costs

Using multiple sources can reduce mortgage payments, improve approval strength, and help buyers avoid stretching their budget too thin.

Final Thoughts

Buying your first home in Ontario rarely comes down to one perfect savings account. It’s usually about understanding how FHSA funds, RRSPs, and gifted money can work together.

With proper planning, many buyers are closer to home ownership than they realize.

When purchasing your first home, one of the most important mortgage decisions is whether your financing will be insured or uninsured. The difference affects how much you need for a down payment, how your mortgage is structured, and how much flexibility you have long term.

Recent rule changes have created additional options specifically for first time home buyers, particularly around purchase price limits and amortization periods.

Below is a clear explanation using an example of a first time buyer purchasing a $750,000 home.

What is an insured mortgage

An insured mortgage applies when the buyer puts less than 20 percent down.

In Canada, mortgage default insurance is required whenever the down payment is under 20 percent. This insurance protects the lender, not the buyer, in the event of default. The insurance is provided through CMHC, Sagen, or Canada Guaranty, and the premium is typically added to the mortgage rather than paid out of pocket.

Under the updated rules, first time home buyers may purchase homes up to $1.5 million with insured financing, provided they meet the minimum down payment requirements.

In addition, first time buyers now have access to insured 30-year amortizations, which can significantly reduce monthly payments compared to the traditional 25-year limit.

Insured mortgages also typically qualify for the lowest interest rates available in the market.

What is an uninsured mortgage

An uninsured mortgage applies when the buyer puts at least 20 percent down or chooses not to use mortgage default insurance.

Because the lender assumes more risk, uninsured mortgages usually come with slightly higher interest rates. However, there is no insurance premium added to the mortgage balance.

Uninsured mortgages may also allow amortizations of up to 30 years depending on lender guidelines and borrower qualification.

Example using a $750,000 purchase

Let’s assume a first time buyer is purchasing a home in Burlington for $750,000.

With insured financing, Canada’s minimum down payment rules apply. Five percent is required on the first $500,000, which equals $25,000. Ten percent is required on the remaining $250,000, which equals another $25,000.

The total minimum down payment is $50,000, or approximately 6.7 percent.

The mortgage amount before insurance would be $700,000. Mortgage insurance at this level is roughly four percent, or about $28,000. This premium is added to the mortgage, bringing the final mortgage amount to approximately $728,000.

The benefit of this approach is a significantly lower cash requirement and access to insured rates, which are typically the lowest in the market. The tradeoff is a higher mortgage balance due to the insurance premium.

With an uninsured mortgage, the buyer must put at least 20 percent down. On a $750,000 purchase, this equals $150,000.

The resulting mortgage would be $600,000 with no insurance premium added. While this requires an additional $100,000 up front, it results in a lower mortgage balance and reduced long term interest costs.

Comparing the two options

With an insured mortgage, the buyer purchases with $50,000 down, carries a mortgage of approximately $728,000, benefits from lower interest rates, and may now access a 30-year amortization as a first time buyer.

With an uninsured mortgage, the buyer puts $150,000 down, carries a $600,000 mortgage, avoids insurance costs entirely, and may also qualify for a 30-year amortization depending on lender policy.

Which option is better

There is no universal right answer.

Insured financing may be ideal for buyers who want to enter the market sooner, preserve savings, or benefit from lower interest rates and extended amortization options.

Uninsured financing may suit buyers with strong savings who want to minimize debt, avoid insurance costs, or plan to refinance or upgrade in the future.

In many cases, the decision comes down to whether it is more important to keep cash available today or reduce borrowing costs over time.

Final thoughts

For first time buyers purchasing a $750,000 home, insured versus uninsured financing is no longer just about the size of the down payment. New rules around purchase price limits and amortization options have created more flexibility, but also more complexity.

That is why reviewing the full mortgage structure matters just as much as reviewing the rate. The right mortgage should support your long term plans, not simply meet minimum qualification requirements.

Buying and selling a home at the same time can be stressful, especially when the closing dates do not line up. In Ontario, bridge financing is a common solution that allows homeowners to access the equity from their current home before the sale officially closes.

Bridge loans are frequently used in competitive real estate markets and can provide the flexibility needed to move forward with a purchase without rushing the sale of your existing property.

This guide explains how bridge financing in Ontario works, the costs involved, and when it may be the right option.

What Is Bridge Financing

Bridge financing is a short-term loan that allows homeowners to use the expected proceeds from the sale of their current home before that sale has closed.

It is most commonly required when:

• The purchase of a new home closes before the sale of the existing home
• Sale proceeds are needed for the down payment
• Closing dates are days or weeks apart

The bridge loan “bridges” the timing gap between the two transactions.

How Bridge Financing Works

Once your home sale is firm and unconditional, the lender advances funds based on your net sale proceeds. These funds are typically sent directly to your lawyer to be used toward the purchase of your new home.

Bridge financing is:

• Short term
• Interest only
• Automatically repaid when the sale closes

There are no monthly payments during the bridge period. Interest accrues daily and is paid in full once the sale completes.

How the Bridge Amount Is Calculated

Lenders do not lend based on the full sale price. Instead, they calculate bridge financing using your net equity.

This includes:

• Sale price
• Less existing mortgage payout
• Less real estate commissions
• Less legal fees and adjustments

The remaining amount is the net sale proceeds. Some lenders apply a safety buffer and may advance slightly less than 100 percent of this figure.

Typical Bridge Financing Timeframes in Ontario

Most lenders allow bridge financing from 1 to 90 days. In some situations, this can be extended to 120 days, depending on the lender and strength of the file.

The sale must be firm with no outstanding conditions.

What Bridge Financing Can Be Used For

Bridge financing can be used for:

• Down payment on the new home
• Land transfer tax
• Closing costs
• Interim funding between purchase and sale

It is not intended as long-term financing and cannot replace a mortgage.

Bridge Financing Costs

Bridge loan interest rates in Ontario typically range from:

Prime plus 2 percent to prime plus 5 percent

Interest is charged only for the exact number of days the bridge is used.

Legal fees generally range from approximately 300 to 800 dollars depending on the lender and transaction complexity.

Bridge Financing Options in Ontario

Bank Bridge Financing

Major banks such as TD, Scotiabank and BMO offer bridge financing tied directly to their mortgages.

Pros include easier coordination and competitive pricing.
Cons include conservative equity calculations and limited flexibility.

Monoline Lenders Through Mortgage Brokers

Lenders such as First National, MCAP and RMG offer strong bridge programs.

They are very familiar with purchase and sale transactions and often provide competitive rates, though documentation requirements can be stricter.

Using an Existing HELOC

If a home equity line of credit is already in place, it may sometimes replace bridge financing.

This can offer lower interest costs but must be set up in advance and will count toward debt servicing.

Private Bridge Financing

Private bridge loans are typically used when traditional lenders are not an option.

They offer flexibility but come with significantly higher interest rates and additional fees.

Risks to Understand

The home sale must close as scheduled. Bridge loans are due immediately upon sale closing, and extensions are not guaranteed. Any delay can increase interest costs quickly, making proper planning essential.

Final Thoughts

Bridge financing can be a powerful tool when buying and selling a home at the same time. When structured correctly, it allows homeowners to purchase confidently without rushing their sale or disrupting long-term mortgage plans.

Because bridge loans are short term and time sensitive, working with an experienced Ontario mortgage professional can help ensure the financing is set up properly and costs are kept under control.