5%, 10%, or 20%: Which Down Payment Is the Most Advantageous?
Planiprêt
Apr 20, 2026
Buying a property is one of the most significant investments in a lifetime. One of the first questions buyers ask is: How much should I put down as a down payment?
In Canada, it is possible to purchase a home with as little as 5% down. However, some buyers choose to save more to reduce long-term costs. So, is it better to invest 5%, 10%, or 20%? The answer depends on your financial situation and objectives.
There is no universal solution. The best decision is the one that aligns with your overall financial strategy.
A 5% Down Payment: Enter the Market Sooner
This option allows buyers to access homeownership more quickly.
Advantages
- Faster access to homeownership
- Opportunity to benefit from market appreciation
- Build equity sooner
Considerations
- Mortgage loan insurance is required
- Higher monthly payments
- Higher overall borrowing costs
A 10% Down Payment: A Balance Between Accessibility and Savings
This option offers a compromise between purchasing sooner and reducing costs.
Advantages
- Lower mortgage insurance premiums
- Reduced loan amount
- Better financial balance
Considerations
- Requires additional savings
A 20% Down Payment: Maximizing Long-Term Savings
Reaching a 20% down payment eliminates the need for mortgage loan insurance.
Advantages
- No mortgage insurance required
- Lower monthly payments
- Reduced total interest costs
- Greater financial flexibility
- Longer savings period
- Interest rates may be slightly higher than those of insured mortgages
Indeed, insured mortgages carry less risk for lenders because they are backed by insurers such as CMHC, Sagen, or Canada Guaranty.
As a result, they generally benefit from more competitive interest rates.
In contrast, uninsured mortgages may carry slightly higher rates. The difference typically ranges from 0.10% to 1%, depending on market conditions and the borrower’s profile.
Understanding Mortgage Loan Insurance
When the down payment is less than 20%, the mortgage must be insured. The premium is usually added to the mortgage amount and varies based on the size of the down payment.
Sources of a Down Payment
- Personal savings
- Home Buyers’ Plan (HBP)
- First Home Savings Account (FHSA)
- Gift from a family member
- Sale of assets
How to Choose the Best Option? The right choice depends on your financial capacity, objectives, and risk tolerance.
The best down payment is the one that fits your overall financial plan.
Need Guidance for Your Home Purchase? Talk to us to evaluate your situation and determine the strategy best suited to your needs.
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