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You’ve probably heard this before:

Buy now with 5% down — or wait and save for the full 20%.

It’s one of the biggest decisions first-time buyers in Canada face. And both paths have real trade-offs.

What you choose depends on your goals, your timeline, and your appetite for risk.

Now, let’s dive in.

In Canada, you can buy a home with as little as 5% down.

Here’s how it works:

• If the home is under $500,000, you need 5%
• Between $500,000–$1,499,999? It’s 5% on the first $500K and 10% on the remainder.  Up from $999,999, thanks to a recent update to insured rules.
• $1,500,000 and up requires 20% down.

But if you put less than 20% down, you’ll pay mortgage default insurance.

That premium — often 2.8% to 4% of your mortgage — gets added to your loan and accrues interest over time.

Still, this option gets you into a home faster. And that can be worth a lot.

Run the numbers using our mortgage calculator

Put 20% down, and you skip the insurance.

You also start with a smaller mortgage, which usually means a lower monthly payment.

It can feel safer, simpler, and more flexible when it comes time to refinance or pull equity.

But here’s the rub — most buyers don’t hit that 20% mark without years of saving.

And in the meantime, home prices may keep rising, stretching the finish line further away.

It depends.

If it takes you 3–5 years to save the full 20%, the home you’re saving for could be 5–25% more expensive by the time you’re ready.

And that larger price tag could erase any benefit you gained by skipping the insurance premium.

Check out this strategy for first-time buyers to grow your down payment faster

Let’s say you buy a $500,000 home with $25,000 down (5%).

If the value goes up 5% in a year — that’s $25,000 in appreciation.

Your return on that initial $25K?

100%.

That’s the power of leverage. And it’s one reason why early buyers often grow their wealth faster — even if they start small.

For many, the first home isn’t the forever home.

It’s a stepping stone.

If your goal is to eventually keep your first home as a rental and move into a second property, buying with 5% down can help you build equity and savings for that second purchase faster.

Less cash tied up = more flexibility later.

Yes, going in with 5% means:

• Higher monthly payments
• More interest paid over time
• Slower equity growth (at first)
• Tighter restrictions on refinancing or switching lenders

But you also get:

• Earlier entry into the market
  
• A smaller upfront investment
  
• Lower rates due to mortgage insurance
  
• A built-in safety net

Insurers like Sagen offer hardship support if you hit a rough patch — things like deferrals, shared payments, or amortization extensions.

It’s not perfect protection, but it’s more than you get with an uninsured mortgage.

Not always.

Putting 20% down ties up a lot of capital — money you could otherwise invest, save for emergencies, or put toward home improvements.

Yes, you avoid the cost of mortgage insurance. But that comes with higher interest rates.

When you do opt for mortgage insurance, you pay a one-time premium that covers the full amortization (typically 25–30 years). 

That’s a great deal if you keep the mortgage intact for the long haul — it locks in a lower rate for the life of that mortgage.

But if you sell or refinance early, that insurance benefit usually ends.

The break-even point? About 10 years. If you expect to move or refinance before then, it’s worth rethinking your strategy.

One more thing — if you buy again with less than 20% down and qualify, you may be able to transfer that insurance to the new property and save on premiums.

For many buyers — especially in rising markets — the answer leans toward getting in sooner, building equity, and letting the market work for you.

It’s not just “Can I buy with 5% down?”

It’s “What will it cost me if I wait?”

Just make sure your budget is stress-tested and you’re in it for at least five years.

Let’s talk through your numbers, your timeline, and your goals — and build a plan that works for you.