Mortgage Blog
Everything about Low Mortgage Downpayment (5%) in Canada
January 14, 2025 | Posted by: Sarabjit Dhuna
5% down payment is really good option to enter into housing market for young people. While 20% down payment offers long term benefits like economic advantages and you can also save money for the long terms. In this article I will talk about advantages and disadvantages of 5% down payment.
5% Down Payment: -
For the house price of 500K or less then you are required to pay minimum 5% down payment of the house price.
Advantage of 5% Down payment
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For the young or first-time home buyer, it will be easier for them enter into housing market to save and pay 5% down payment which is $25,000 (Consider the price of the home is $500,000) compared to 20% which is almost $100K. 5% down payment is good for the people who are just moving from rented to first –time home buyer.
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5% down payment options are good for the people who lives in high cost of living cities like Toronto and Vancouver. so, they can still enter into housing market with 5% down payment.
Disadvantages of 5% down payment
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When the borrower gets more money borrowed then borrower needs to pay larger payments. Monthly payment would be more in compare to if you put 20% down payment.
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When you opt for 5% down payment then you also must take mortgage insurance from CMHC. For example, with only 5% down payment, with the price of $500K you also need to pay $19,000 CMHC insurance which can add in mortgage monthly balance. So, you basically you have to pay more money in mortgage payment.
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