How Much Down Payment Do I Really Need?


Is there a difference between putting a down payment of 5% down as opposed to 20%? Can I get away with only 5%? The quick answer is yes, the minimum amount required for a down payment is 5%, but there are some things to consider if you do. 

If you’re new to home ownership, it can be a real challenge to save up a down payment to buy a home. Lenders require a minimum of 5% down to qualify you for a mortgage, as they typically want to see some level of financial commitment from you as well. 

For down payments less than 20%, however, your mortgage MUST be insured. The Canadian Mortgage and Housing Corporation handles most of these insured mortgages, and the premium will be automatically applied to the principal balance of your mortgage. This premium is a one-time lump sum fee added at time of purchase. This means your mortgage balance will be a bit higher at time of purchase than the price of your home. 

You can put down any amount between 5% and 20% of the purchase price of your home, and your CMHC insurance premium will be adjusted accordingly. The closer to a 20% down payment you are, the less your premium will be. 

If you decide you don’t want an insured mortgage, you must put at minimum 20% down payment on your purchase. 

If you have any questions about what amount of down payment is right for you, contact me today and I’ll be happy to help.