Updated: April 2025  |  bremo.io financial guides

Putting 20% Down in Canada — Benefits and Trade-offs

A 20% down payment is the threshold that separates insured from uninsured mortgages in Canada. Cross this line and you avoid the CMHC insurance premium, gain access to 30-year amortization, and reduce your monthly payments. But getting there requires either significant savings time or a higher-priced property becoming harder to access. Here's the full picture.

What 20% Down Unlocks

1. No CMHC Insurance Premium

The most immediate benefit. With 20% down, you're not required to purchase mortgage default insurance. On a $600,000 home with 10% down, the CMHC premium is $16,740 added to your mortgage. With 20% down, that cost is eliminated entirely — saving you thousands upfront and in interest over time.

2. 30-Year Amortization Available

Insured mortgages (under 20% down) are limited to 25-year amortization for most buyers. Uninsured mortgages can be amortized over up to 30 years at most lenders. A longer amortization means lower monthly payments, though you pay more interest over the full term.

3. Access to More Lenders and Products

With a conventional (uninsured) mortgage, you can access a broader range of lenders, including some that don't offer insured products. This can translate to more competitive rates and more flexible terms.

4. More Equity From Day One

Starting with 20% equity means you're well above water if property values soften. You also have room to access a HELOC (home equity line of credit) if needed for renovations or emergencies.

The Cost Comparison: 5% vs. 20% Down

The 20% down option saves approximately $560/month in payments and avoids $17,515 in insurance premiums. That's significant. But it requires an additional $85,000 in savings up front.

The Trade-offs of Saving Longer

The case for 20% down is clear financially — but the case against it is the opportunity cost of waiting. In markets where home prices rise year over year, every year you wait means:

• The target price rises, making 20% of it harder to reach
• You continue paying rent rather than building equity
• You miss out on potential appreciation gains

Is 20% Always Better?

Not necessarily. The answer depends on your market, your time horizon, and what you'd do with the savings you'd otherwise put toward the extra down payment.

20% down is clearly better when:

• You already have the funds and don't need to delay buying
• The housing market is flat or declining (no opportunity cost to waiting)
• Your budget is tight and lower payments meaningfully reduce financial stress

5-10% down may be better when:

• Prices are rising quickly and waiting significantly increases the total cost
• You're financially stable and can absorb the higher payments
• You'd invest the difference in savings productively in the interim

The Conventional Mortgage Rate Advantage

Conventional (uninsured) mortgages sometimes attract slightly lower rates because the lender has a larger equity buffer. The difference isn't always dramatic, but some lenders do differentiate pricing based on loan-to-value ratio. A broker can identify lenders where conventional borrowers get preferential pricing.