Buying a luxury home in Toronto is exciting, but the financing math can feel complex fast. You are weighing large down payments, strict qualifying rules, and layers of closing taxes that can change your numbers at the last minute. This guide simplifies your options so you can structure a jumbo mortgage with confidence, avoid surprises, and move quickly on the right property. Let’s dive in.
What “jumbo” means in Toronto
In Canada there is no single federal cutoff for a “jumbo” mortgage like in the U.S. Instead, lenders look at whether a mortgage can be insured and how large the loan is. The federal government recently raised the maximum home price eligible for a high‑ratio insured mortgage to C$1.5M, effective December 15, 2024. That change opened insured options for some buyers up to that price point, but many luxury purchases still require uninsured, portfolio, or private financing. See the rule details in the Canada Gazette update.
Lenders must also apply the mortgage stress test. You are qualified using the greater of your contract rate plus 2 percent or the regulator’s floor, which reduces borrowing power when rates are higher. Review OSFI’s guidance in the Annual Risk Outlook.
Why luxury buyers should plan early
Toronto’s upper‑tier market remains active, with continued interest and growth at higher price points through 2024 and cycles in 2025. You need a clear plan for down payment, approval timelines, and closing costs to compete. Market context from 2024 shows robust activity, as highlighted in this luxury market snapshot.
The real cost to close in Toronto
Beyond your down payment, budget for taxes and fees that are non‑negotiable.
- Provincial Land Transfer Tax: Ontario charges graduated rates, including 2.5% on amounts over C$2M.
- Toronto Municipal Land Transfer Tax: Charged on top of the provincial tax, with extra high‑value tiers. Marginal rates increase above C$3M and can reach 7.5% for values above C$20M. Review current brackets on the City’s MLTT rates and fees page.
- Non‑resident taxes: Ontario’s NRST is separate and may apply to non‑resident buyers. Toronto also introduced a 10% Municipal Non‑Resident Speculation Tax effective January 1, 2025. Learn more about the provincial NRST rules on the Ontario government page and federal policy context on Canada.ca.
Build these amounts into your cash‑to‑close from the start. They can materially change your total budget and your financing strategy.
Lender options for high‑value mortgages
Major banks and portfolio lending
Big banks will fund large single mortgages, often keeping them on their own books. Expect stricter loan‑to‑value limits, tighter debt ratios, and more documentation. For a primer on why banks hold certain large loans in house, see this overview of portfolio lending.
Non‑bank lenders
Large non‑banks active in the broker and direct channels can be competitive on high balances and alternative qualifying. For market context, see background on a leading non‑bank lender in Canada like First National.
Private lenders
Private capital is useful when timing is tight or documentation is complex, but costs are higher and terms are shorter. Many private lenders cap single loans around C$1M to C$1.5M, with fewer options above that range. Read what private lenders look for in this Canadian Mortgage Trends guide.
What lenders scrutinize
- Loan‑to‑value ratio, often capped near 65% to 80% for very large loans.
- Debt service ratios using the stress test qualifier.
- Source of down payment and liquid reserves.
- Income documentation for salaried and self‑employed buyers.
- Clear exit plans for bridge or private loans.
Smart jumbo strategies that work
1) Use the insured window when you can
If your target price is at or below C$1.5M and your down payment is under 20%, you may qualify for an insured mortgage with a smaller down payment schedule. Confirm fees and rules in the Canada Gazette changes. For homes above C$1.5M, plan on uninsured or alternative structures.
2) Increase your down payment
Boosting equity improves pricing, expands lender choice, and helps you pass the stress test. Many high‑balance approvals are smoother at lower LTVs.
3) Split or ladder the financing
Combine a competitive first mortgage with a smaller second mortgage or HELOC to cover the rest. You can also use equity in another property to strengthen the overall LTV through cross‑collateralization, subject to lender approval.
4) Qualify with assets
High‑net‑worth buyers sometimes qualify using pledged liquid assets or asset‑depletion methods instead of traditional employment income. Expect pledge agreements and conservative lender calculations.
5) Use bridge financing for timing
When you need to buy before selling, a short‑term bridge loan can secure the property, then be repaid with sale proceeds or a refinance. Build an exit plan before you commit.
6) Add a HELOC or second for renovations
Pair your primary mortgage with a HELOC or a closed‑end second to fund renovations or finishing costs. Structure the draws to match your project timeline.
7) Keep private lending tactical
Private mortgages can close quickly and solve complex scenarios. Treat them as short‑term and be clear on your exit to conventional financing or sale. For cost and underwriting expectations, see Canadian Mortgage Trends.
8) Corporate, trust, or foreign buyer setups
If you plan to purchase through a company, trust, or as a non‑resident, lenders will apply different rules. Additional municipal and provincial taxes can also apply. Review Toronto’s MLTT and MNRST overview and federal restrictions summarized on Canada.ca, and consult legal and tax advisors early.
Timeline and prep checklist
A realistic plan makes approvals smoother and protects your negotiating power.
- Pre‑approval and lender short‑list: 1 to 2 weeks, faster with experienced broker access.
- Conditional approval and appraisal: 2 to 6 weeks, complex structures and valuations may add time.
- Closing: 30 to 90 days is common, while some private lenders can close within days when documents are ready.
What to prepare:
- ID, recent pay stubs and employment letter, or two years of tax filings for self‑employed buyers.
- Bank and investment statements to verify down payment and reserves.
- Purchase contract, condo documents if applicable, and renovation budgets if financing improvements.
- A clear exit for any bridge or private loan.
- Early coordination with your real estate lawyer on title, LTT, and any NRST or MNRST questions.
Partner with a team that knows luxury finance
You deserve advice that blends market strategy with financing reality. With deep experience in Toronto’s luxury segment and a concierge approach, we help you model costs upfront, time your purchase and sale, and navigate lender expectations so your offer stands out. If you are exploring a high‑value move in Toronto or York Region, start a private conversation with Nicole Digalakis to plan your path.
FAQs
What is considered a jumbo mortgage in Toronto?
- In Toronto, “jumbo” generally refers to mortgages that are too large to be insured or that exceed many lenders’ internal caps, which pushes you toward uninsured, portfolio, or private solutions.
How did the new C$1.5M insured cap change my options?
- The higher cap allows some buyers of homes priced up to C$1.5M to use insured mortgages with smaller down payments, but purchases above C$1.5M are typically uninsured and require 20% or more down or alternate structures.
How does the mortgage stress test affect luxury purchases?
- Lenders qualify you at the higher of your contract rate plus 2 percent or the regulator’s floor, which reduces maximum borrowing and often requires larger down payments or enhanced documentation.
What closing taxes should I expect on a multi‑million dollar Toronto home?
- Budget for both Ontario’s Land Transfer Tax and Toronto’s Municipal Land Transfer Tax, plus any applicable non‑resident taxes, which can add materially to your cash‑to‑close.
Are private lenders my only option for very large loans?
- Not always; major banks and non‑bank lenders fund many high‑balance mortgages, while private loans are best used for speed, unique income or ownership structures, and short‑term bridging with a clear exit.
