What is down payment assistance?

What is down payment assistance?

Last updated
Sep 2022
5 min
Written by
Chrissy Kapralos
  • Buying a property in Canada requires a significantly large down payment, often unattainable for the average Canadian. 
  • Down payment assistance is any grant, loan, tax incentive, or rebate that supports your down payment.
  • Various levels of government and other organizations offer down payment assistance programs, usually in the form of a loan ranging from 5-10% of the purchase price. 
  • Lotly provides prospective Ontario homeowners with the most favourable down payment assistance to make real estate more accessible.

When was the last time you had $149k in your savings account? If you live in the GTA, we’re thinking never, unless you’re an incredibly successful professional or have a hefty allowance from mom and dad. 

Shockingly, that’s what a 20% down payment looks like for the average Canadian home ($746k). Of course, you could secure a mortgage with 5% down on the first $500k, and 10% on the remaining $246k (about $50k), but that’s still a large chunk of change — plus, you’d be on the hook for mortgage insurance. 

The reality for many Canadians (especially in Ontario and the GTA) is down payments are too expensive, and nearly unattainable. Inflation, rising rent, and life in general, get in the way of setting aside that much dough. Some experts even assert it would take Toronto residents 26 years to save up for a down payment — and that’s with a salary of almost $200k. 

PRO TIP: Use our Toronto Real Estate Market tool to see average home price trends!

Now we’re not discounting the power of hard work and strict budgeting. You’ll certainly need those as a first-time home buyer. But sometimes, it’s not enough — and that’s OK. It’s no secret that policy makers have neglected this imbalance for years, and it’ll take some time to rectify.

That’s where down payment assistance and innovative financing solutions like Lotly come in. 

Let’s go through everything you need to know about Ontario’s down payment assistance programs and how Lotly can help you buy your first home. 

So, what actually is down payment assistance? 

Down payment assistance (DPA) is any grant, loan, tax incentive, or rebate that supports your down payment. It’s usually government bodies offering down payment assistance, although some private organizations offer it as well. 

Is this the first time you’re hearing about down payment assistance? Not surprising. Down payment assistance in Ontario hasn’t caught up with other parts of the world. These programs are incredibly common and valuable in the US, with the government guaranteeing 5, 10, or even 20% of a down payment for home buyers. 

For example, the United States Federal Housing Administration offers FHA Loans, some with reduced or even zero-percent down payment requirements for qualifying borrowers. The Bank of America’s most recent Community Affordable Loan Solution provides homeownership opportunities to eligible individuals through zero-percent down mortgages. 

5 Down payment assistance programs in Ontario

Canada, and more specifically Ontario, might not have DPA programs as extensive as the US, but we still have some options.

1. The first-time home buyer incentive

Canada’s first-time home buyer incentive is a shared equity form of assistance of either 5% or 10% of your down payment. This isn’t a grant, it’s a loan you’ll be responsible for repaying, but you’ll have 25 years (or until you sell) to do it. 

On top of the original loan amount, you’ll have to pay the government a maximum of 8% in appreciation (or depreciation). Let’s see how this works in practice: 

Say your purchase price is $1,200,000. A 5% loan looks like $60k, but you still need another $120k for your 20% down payment. 

You have to consider what a lender would reasonably approve with your salary. If you’re making $60k a year, you’ll likely only be approved for a $400k mortgage ($500k property price). That leaves you still owing $100k in down payment, and only being able to secure a measly $5k through the first-time home buyer incentive. 

Note: Most borrowers will only qualify for 5% in assistance. The 10% category is only for new constructions.


  • Income under $120k ($150k if in Toronto or Vancouver)
  • Canadian citizen, permanent resident, or otherwise authorized to work in Canada
  • First-time home buyer
  • Minimum down payment requirements
  • Loan amount doesn’t exceed 4x your income
  • Purchased home isn’t an investment property

DPA amount: 5% or 10% of the purchase price

Repayment terms: 5% or 10% of the most current property value (max 8% appreciation) after 25 years or upon selling the property

2. Home Buyer’s Plan (RRSP withdrawal)

Do you have a Registered Retirement Savings Plan (RRSP)? It’s a great way to save for retirement, but beware of the hefty penalties and tax implications for withdrawing early — unless it’s for a down payment, of course! The Canadian Home Buyer’s Plan allows you to withdraw up to $35k from your RRSP tax-free if you’re a first-time home buyer


  • First-time home buyer
  • Have an RRSP 

DPA amount: $35k

Repayment terms: Repay full amount within 15 years

3. Home buyers’ amount tax refund

Now, this particular DPA program won’t offer any assistance pre-home purchase but, we felt the amount ($5k) is significant enough to mention on our list. Say you’re $5k short on your down payment… You might consider borrowing that $5k because you’ll be eligible to receive the Home Buyers’ Amount Tax Refund when you file your taxes. 


  • Home is your (or a relative’s with a disability) primary residence within one year of purchase
  • Single-family, semi-detached, townhomes, mobile homes, condos, or apartments within a duplex, triplex, fourplex, or other apartment buildings
  • You haven’t lived in another home owned by you or your spouse/common-law partner in the last four years 

DPA amount: $5k refund

Repayment terms: None — it’s yours. 

4. Ontario land transfer tax refund

Everyone has to pay land transfer tax when they purchase a property. The tax is particularly high in Ontario, but first-time home buyers get a break. Ontario has a land transfer tax refund of $4k for first-time home buyers. 

Eligibility: First-time home buyer

DPA amount: Maximum $4k tax refund

Repayment terms: None — it’s yours 

5. Other down payment assistance programs in Ontario

Have your heart set on a specific region like Simcoe County or Waterloo? Some Ontario municipalities offer DPA for home buyers in their jurisdictions, along with some private companies. 

Here’s a quick list of some other Ontario DPA programs: 

Buy your first home with Lotly!

At Lotly, we recognize the dire need for more innovative and flexible down payment assistance

That’s why we connect aspiring home buyers with real estate investors. We provide up to $250k towards your down payment, and our skilled legal and real estate professionals will help you navigate the entire process, from home search to mortgage selection through closing. 

You might be thinking, “But how do your down payment investors get paid?” Explore our home owner vs investor split calculator. Other burning questions? Visit our FAQ.

If you think you’re ready to buy a home and we can help, let’s chat. Get started on becoming a Lotly home buyer today!

Join Lotly as a homebuyer
Get Started
Chrissy Kapralos
Writer & editor
Chrissy Kapralos runs a Toronto-based writing agency called No Worries Writing Co. She loves writing about personal finance and real estate topics and helping businesses communicate effectively with their customers. When she's not working, you can find her travelling, practicing yoga, or watching horror movies.