In Toronto in 2026, that assumption is breaking fast.
Condo buyers with solid down payments, decent income, and clean credit are being surprised by last-minute mortgage issues, reduced approvals, or outright declines — even after doing everything “right.”
So what’s really going on?
The Condo Problem Isn’t Buyers — It’s Risk
Banks aren’t tightening because buyers suddenly got weaker.
They’re tightening because condos have become a risk category.
In Toronto, lenders are increasingly cautious due to:
oversupply in certain condo segments
declining investor demand
stagnant or falling appraisals
smaller unit sizes with limited resale pools
Even strong buyers are being caught in a system that’s pulling back exposure, not assessing case-by-case value.
20% Down Doesn’t Offset Appraisal Risk
Here’s the disconnect most buyers don’t expect.
You might put 20% down based on the purchase price — but banks lend based on the lower of purchase price or appraised value.
When condo appraisals come in low:
your effective down payment suddenly isn’t enough
the mortgage amount gets reduced
the deal has to be restructured — or dies
This is happening frequently with:
investor condos
smaller units
buildings with high rental ratios
newer towers with many comparable listings
Condo Rules Are Changing Quietly
In 2026, many lenders are:
limiting exposure to certain buildings
blacklisting postal codes or projects
tightening condo-specific underwriting rules
reassessing reserve funds and condo fees more aggressively
None of this shows up in marketing — but it shows up at approval time.
Why Self-Employed & Investors Are Hit Hardest
Condos were once the easiest asset for:
self-employed buyers
first-time investors
rental-focused strategies
Now those same borrowers face:
stricter income scrutiny
lower accepted rental offsets
reduced flexibility on ratios
Even with strong equity, condo files are being treated as higher risk.
Why This Is Worse in Toronto Than Elsewhere
Toronto’s condo market has:
the highest concentration of small units
the most investor-owned inventory
the largest pipeline of resale supply
That makes lenders extra cautious — especially when liquidity matters more than price.
How Buyers Are Still Closing Condo Deals in 2026
This is where strategy matters.
Many buyers are turning to:
short-term financing
equity-based solutions
private mortgages as a bridge
alternative structures that prioritize closing first
The goal is often temporary:
close now
stabilize later
refinance when conditions improve
When a Private Mortgage Makes Sense for a Condo
A private solution may help if:
the appraisal came in low
the lender reduced the mortgage amount
condo rules changed mid-process
the closing date is approaching
Speed and flexibility matter more than rate when deposits and legal exposure are on the line.
How Lendworth Helps Condo Buyers in Toronto
Lendworth works with Toronto condo buyers and owners facing:
appraisal shortfalls
lender pullbacks
time-sensitive closings
We focus on:
equity and real-world value
short-term structures
clear exit planning
fast decisions when timing matters
👉 Apply or speak with a lender:
https://www.lendworth.ca/borrow
Final Thought
In 2026, 20% down is no longer a guarantee — especially for condos in Toronto.
Understanding lender risk, valuation limits, and timing options is now just as important as saving for a down payment.