How Much Should I Put for a Down Payment?

One of the biggest decisions when buying a home is how much to put down. While the minimum down payment in Canada is just 5%, many buyers wonder if they should aim for 20% instead. The truth is, there isn’t a one-size-fits-all answer — it depends on your financial situation and long-term goals.

Everyone’s Situation Is Different

• If putting 20% down will drain your savings, it may not be the best move. Paying the default insurance premium could be worth it if it means keeping money aside for:

  • Emergency savings

  • Renovations or upgrades

  • Furniture or moving costs

  • A rainy-day fund

• If your priority is the lowest monthly payment possible, then putting more down makes sense. With 20% or more, you avoid default insurance and reduce the overall mortgage amount.

What Is Mortgage Default Insurance?

In Canada, if you put less than 20% down, you need mortgage default insurance (CMHC, Sagen, or Canada Guaranty). This protects the lender, not you, but it allows buyers to enter the market with as little as 5% down. The cost is added to your mortgage and financed over the life of the loan.

5% vs. 20% Down: A $500,000 Example

Here’s how the numbers look on a $500,000 purchase:

5% Down Payment

• Down payment: $25,000

• Mortgage: $475,000

• Mortgage insurance: $19,000

• Total financing: $494,000

• Monthly payment: $2,690

20% Down Payment

• Down payment: $100,000

• Mortgage: $400,000

• Mortgage insurance: $0

• Total financing: $400,000

• Monthly payment: $2,201

That’s a difference of nearly $500 per month, plus avoiding almost $20,000 in insurance costs.

So, What’s the Right Choice?

• If you want to get into the market sooner and keep cash on hand, the minimum down payment may be the better option.

• If you’re focused on long-term savings and lowering your monthly costs, 20% (or more) can be worth it.

The best choice depends on your financial comfort level and what matters most to you.

FAQ

Can I put more than 5% but less than 20%?
Yes. A 10% or 15% down payment reduces your mortgage size and insurance cost, even though you’ll still need default insurance until you hit 20%.

Does it ever make sense to choose less than 20% down, even if I can afford more?
Yes. Many buyers choose to keep more of their cash available for investments, emergencies, or renovations rather than tying it all up in their home.

Final Word

There’s no universal right answer for how much to put down. It comes down to your goals, your comfort with monthly payments, and whether you’d rather keep more money in your pocket upfront or reduce your mortgage costs over time.

Call or text (902) 402-9779, or visit www.gregmatthews.tmgbroker.com/apply.aspx to fill out a five-minute pre-approval form.