20% down vs less: the trade-off
Putting 20% down avoids the mortgage insurance premium and shrinks your loan — but a smaller down payment gets you in sooner and keeps cash in hand. Here's how to weigh it. Run the numbers with the CMHC insurance calculator and mortgage payment calculator.
Quick answer20% down means no insurance premium, a smaller mortgage, and lower lifetime interest — but you need much more cash and may buy later. Less than 20% down means you pay a premium of 0.60%–4.00% of the mortgage and carry a bigger loan, but you buy sooner and keep cash for moving, furniture and emergencies. There's no universal winner — it depends on your timeline and cash.
The case for 20% down
- No premium. You skip the mortgage default insurance premium entirely — up to 4.00% of the mortgage, which is often $15,000–$40,000 on typical prices.
- Smaller mortgage, less interest. A larger down payment cuts the principal, so you pay less interest over the amortization.
- More options. Uninsured mortgages can be used on homes at or above the $1.5M cap and for some property types insurance won't cover.
The case for less than 20% down
- Buy sooner. Saving another 10–15% of a home's price can take years. Getting in earlier can matter more than the premium if prices or rents are rising.
- Keep cash. A smaller down payment leaves a buffer for closing costs, moving, repairs and emergencies instead of draining your savings.
- Premium can be financed. The premium is usually added to the mortgage, so it isn't extra cash at closing (though you pay interest on it).
Side-by-side on a $500,000 home
| | 5% down | 20% down |
|---|
| Cash for down payment | $25,000 | $100,000 |
| Loan-to-value | 95% | 80% |
| CMHC premium | 4.00% = $19,000 | None |
| Mortgage (premium added) | $494,000 | $400,000 |
| Up-front cash needed | Lower | Higher |
| Lifetime interest | Higher | Lower |
Illustrative — verify with a lender, not financial advice. Excludes closing costs, provincial sales tax on the premium (ON, MB, QC), taxes and fees. See
the full $500k breakdown.
How to decide
Ask three questions: (1) How long until you'd have 20% saved — and what happens to prices and rent meanwhile? (2) Would 20% down leave you cash-poor at closing? (3) How long do you plan to stay — longer stays make the lifetime-interest saving of 20% down more valuable. Model both with our calculators and confirm qualification in how much mortgage can I get?
Frequently asked questions
Does 20% down get me a lower interest rate?
Not necessarily — and sometimes the opposite. Insured (low-down-payment) mortgages can carry slightly lower rates because the lender's risk is insured. Compare quotes; the premium and rate together determine the true cost.
Can I put down between 5% and 20%?
Yes. Every extra dollar of down payment lowers your loan-to-value and can drop you into a cheaper premium band (e.g. 3.10% at 85.01%–90% vs 4.00% at 90.01%–95%).
Is the premium refundable if I sell?
Generally no. It's a one-time charge. CMHC's Eco products can refund 25% of the premium for energy-efficient homes — ask your lender.
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