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Do I Need 20% Down to Buy A Home?
May 5, 2025 | Posted by: Cecile Morell
You Don’t Need 20% Down to Buy Your First Home – Here’s How CMHC Can Help
If you're dreaming of homeownership but think you need a massive 20% down payment to make it happen, good news: you don’t!
As The Mortgage Boss®, I help first-time homebuyers across Ontario, Manitoba, and Canada get into homes with as little as 5% down, thanks to mortgage default insurance through CMHC (Canada Mortgage and Housing Corporation) and other insurers.
Let’s break down how it works, what it costs, and how it can get you into your first home sooner than you think.
What Is CMHC and Why Does It Matter?
CMHC is a Crown corporation that helps Canadians access affordable homeownership. One of its key roles is offering mortgage default insurance, which lets buyers qualify for a mortgage with less than 20% down.
This insurance protects the lender (not you), making it less risky for banks to lend money to buyers with smaller down payments.
How Much Do You Need for a Down Payment?
Here’s the breakdown:
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5% down on homes up to $500,000
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10% down on the portion above $500,000 (up to $999,999)
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20% down is required for homes priced at $1 million or more (CMHC doesn’t insure those)
Example:
Buying a $600,000 home:
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5% of the first $500,000 = $25,000
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10% of the remaining $100,000 = $10,000
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Total minimum down payment = $35,000
How Much Does CMHC Insurance Cost?
CMHC insurance premiums are based on your down payment amount. They typically range from 2.8% to 4% of your mortgage and are added to your mortgage balance (so you don’t pay it upfront).
Yes, it costs money—but it gets you into a home sooner, which means you start building equity and stop paying rent.
Why Choose a CMHC-Insured Mortgage?
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Get into the market sooner: Saving 20% could take years—by then, prices may rise.
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Lower interest rates: Insured mortgages often qualify for better rates because they’re less risky for lenders.
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Avoid high-interest loans: CMHC helps you avoid borrowing at expensive rates just to boost your down payment.
Who Qualifies for CMHC-Insured Financing?
To be eligible:
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Minimum credit score of 600 (680+ is ideal for the best rates)
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Stable income and employment
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Acceptable GDS/TDS ratios (your mortgage broker — me — will calculate this for you)
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The home must be owner-occupied
Is Less Than 20% Down Right for You?
CMHC insurance isn’t free, but for many buyers, it’s the key to getting into the market sooner and building wealth through homeownership. It helps you:
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Lock in today’s prices
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Start building equity
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Stop paying rent
Let’s Talk
If you're looking to buy your first home in Ontario, Manitoba, or anywhere in Canada, I’m here to help you navigate every step—from affordability to pre-approval to possession day.
The Mortgage Boss® is here to make your mortgage make sense.
