Buying a condo in Toronto is one of the most exciting — and sometimes overwhelming — financial decisions you can make. Toronto’s skyline has become synonymous with modern condominium living, offering everything from sleek downtown towers to boutique developments in neighbourhoods like Leslieville, Liberty Village, and the Junction. Condos often appeal to first-time buyers, professionals, and downsizers looking for low-maintenance living close to the heart of the city.
But while condos offer convenience and lifestyle benefits, financing one can be a bit more complex than purchasing a detached home. Understanding how condo mortgages work, what lenders look for, and what extra costs to budget for will help you move forward with confidence.
Understanding How Condo Mortgages Work
At a high level, getting a mortgage for a condo in Toronto isn’t too different from financing any other property. You’ll need to qualify based on your income, debt levels, and credit history, and lenders will assess your ability to meet Canada’s current mortgage stress test.
Where condo mortgages differ is in the extra layer of due diligence that lenders perform. Because you’re buying into a shared building with a condominium corporation, lenders want to ensure the overall property is well managed and financially stable. That means they’ll review the building’s reserve fund, maintenance fee structure, and status certificate before final approval.
The status certificate is one of the most important documents in a condo purchase. It outlines the financial health of the condo corporation, any pending legal issues, and whether major repairs are coming up. If the building has a high number of units in arrears or a low reserve fund, lenders may be hesitant — or may require a larger down payment to offset the risk.
Down Payment Requirements
For most buyers, the minimum down payment on a condo is the same as for any other property:
- 5% on the first $500,000 of the purchase price
- 10% on the portion between $500,000 and $999,999
- 20% if the price exceeds $1 million (as mortgage default insurance isn’t available)
However, lenders may ask for a larger down payment if the building is older, has outstanding maintenance issues, or is primarily investor-owned. These factors can influence both property value and resale potential — two things lenders always weigh carefully.
If you’re purchasing a pre-construction condo, your deposit structure will also differ from a resale. Developers often require staged deposits (for example, 5% at signing, 5% in 90 days, etc.), and your mortgage won’t take effect until the unit is ready for occupancy.
The Role of Condo Fees
Condo fees are another key part of the affordability equation. These monthly payments cover maintenance of common areas, amenities, insurance for the building, and contributions to the reserve fund.
From a lender’s point of view, condo fees reduce your available income for mortgage qualification. Even though they aren’t part of your mortgage payment, they are considered a monthly liability. For example, if your condo fee is $600 per month, your borrowing capacity might drop slightly compared to buying a freehold home with no such fee.
As a buyer, it’s essential to budget for these costs — especially since condo fees can rise over time. Reviewing the building’s financials with your lawyer or realtor will give you a good sense of whether the fees are stable and realistic.
What Lenders Look At
When assessing your condo mortgage application, lenders evaluate two major areas:
- Your personal financial picture: income, employment stability, credit score, debt ratios, and down payment source.
- The building’s overall condition: age, location, management company, reserve fund health, and percentage of rented units.
Toronto has seen rapid condo development over the past two decades, and while most buildings are well run, some smaller or older ones can have underfunded reserves or deferred maintenance. Lenders rely on the status certificate to ensure the condo corporation isn’t facing costly special assessments that could impact owners.
If the building doesn’t meet a lender’s internal criteria, they may still approve the mortgage but with different terms — such as a higher down payment or shorter amortization period.
Getting Pre-Approved
A mortgage pre-approval gives you a clear picture of what you can afford before you start condo shopping. It also signals to sellers that you’re serious and financially ready.
Pre-approval rates are typically held for 90 to 120 days, protecting you from potential rate increases while you search for the right property. It’s not a guarantee of final approval, but it gives you a strong foundation for budgeting and negotiating confidently.
If you haven’t been pre-approved yet, you can start that process easily with The Local Broker. Our team compares rates and options across multiple lenders, not just the big banks, helping you find the right fit for your situation.
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Special Considerations for Condo Mortgages in Toronto
1. High-Ratio vs. Conventional Mortgages
If your down payment is under 20%, your mortgage must be insured through CMHC, Sagen, or Canada Guaranty. These insurers review the property and building as well. If they deem the condo ineligible, your mortgage can’t proceed until issues are resolved.
2. Special Assessments and Reserve Funds
A special assessment occurs when the condo corporation needs to cover unexpected costs — like major roof repairs or elevator replacement — and the reserve fund isn’t sufficient. Lenders review the reserve fund study to ensure there’s enough money set aside for future repairs.
3. Non-Traditional Income
Toronto’s condo market attracts many self-employed buyers and gig-economy workers. If that’s you, lenders will want two years of business financials or tax returns to confirm consistent income. Working with a mortgage broker helps here, since we know which lenders have flexible programs for entrepreneurs and commission-based professionals.
Why Work With a Mortgage Broker for Your Condo Purchase
Navigating the condo mortgage process can feel like learning a new language — and that’s where professional guidance matters.
A mortgage broker:
- Shops your application across multiple banks, credit unions, and alternative lenders.
- Understands the nuances of condo approvals and lender risk policies.
- Can identify potential issues early by reviewing the building’s documents.
- Negotiates better rates and terms, often saving you thousands over the life of your mortgage.
Because brokers are independent, we’re not tied to one bank’s products — we focus on finding what works best for you.
Setting Yourself Up for Success
Buying a condo in Toronto is both a lifestyle and financial decision. The city’s condo market offers something for everyone — from first-time buyers seeking affordability to professionals who want to be close to downtown offices or transit.
The key to success is preparation:
- Get pre-approved early. Know what you can afford before you fall in love with a unit.
- Understand the full costs. Include condo fees, property taxes, insurance, and closing costs in your budget.
- Work with trusted professionals. A good realtor, lawyer, and mortgage broker will protect your interests at every step.
Final Thoughts
Toronto’s condo market continues to evolve, offering opportunities for smart buyers who plan carefully and stay informed. Whether you’re purchasing your first home, downsizing, or investing, a clear mortgage strategy will give you confidence in your decisions.
If you’re ready to take the next step or want to explore what you qualify for, The Local Broker can help you compare options and secure a mortgage that fits your goals and lifestyle.
You can get started today by completing our quick, secure application form here:
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