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The Impact of Down Payment on Your Mortgage: Insights from Our Calculator

by | Sep 21, 2023

Down Payment

The Impact of Down Payment on Your Mortgage: Insights from Our Calculator


In the wake of the recent Bank of Canada decision to halt interest rate hikes, the real estate market has been buzzing with renewed potential. As schools are back in full swing and the holiday season approaches, many are contemplating their entry into the housing market. 

Whether you’re a first-time buyer or considering a move, now is the time to explore the critical aspect of down payments and their profound implications on your mortgage.

Evaluating Down Payments – The Foundation of Your Mortgage Journey

A few months ago, we delved into the world of mortgage calculators and how they can help individuals make informed decisions about their housing options. These calculators play a pivotal role in assessing the monthly interest payments and determining the required down payment to ensure affordability.

The initial 5% of the property’s purchase price is the minimum threshold to enter the market. However, it’s important to note that if your down payment falls below 20%, you’ll also be required to pay for mortgage insurance, which can typically amount to anywhere between $10,000 to $15,000. You might be wondering if 20% is the golden rule, but rest assured, anything between 5% and 15% is acceptable as long as it aligns with your financial readiness. Timing your entry into the market should depend on your personal circumstances, not market fluctuations or peer pressure. 

As you probably know by now, our famous motto is that the right time to buy a home is when you are ready to buy a home. The outside pressure or news headline are not a reason to buy, sell or move.

Unpacking the Benefits of a Substantial Down Payment

The magnitude of your down payment significantly influences your monthly financial commitments throughout the mortgage term. The larger it is, it translates to an upfront reduction in your principal amount, resulting in lower interest payments over the life of the mortgage and reduced principal to repay. This, in turn, leads to more manageable monthly mortgage installments.

However, it’s crucial to recognize that opting for a 20% down payment isn’t necessarily superior if it strains your financial stability. If a 5% down payment offers you more flexibility and less financial stress in meeting your monthly obligations, it’s a viable strategy, even if it means a higher total cost over the mortgage’s duration. There’s a myriad of factors to consider when deciding on the ideal percentage, which is why, in the following week, we will delve deeper into the reasons for and against a 5% down payment and the reasons for and against a 20% or higher down payment.


Your journey into the world of homeownership is not just about finding the perfect property; it’s also about understanding the financial dynamics that come with it. Down payments are the cornerstone of this journey, and they can shape your mortgage experience in significant ways.

As we’ve discussed, the decision between a 5% or a 20% down payment isn’t a one-size-fits-all scenario. It’s about finding the balance that suits your financial comfort and long-term goals. Remember, the right time to enter the market is when you’re ready, not when others dictate.

Stay tuned for our upcoming exploration of the pros and cons of different down payment percentages. Armed with this knowledge, you’ll be better equipped to make an informed decision and embark on your homeownership journey with confidence and clarity. Your dream home awaits, and with the right understanding, you can make it a reality.

Take the Next Step

Ready to dive deeper into the world of down payments and mortgages? Our mortgage team is here to help! Don’t hesitate to reach out for personalized guidance on your homeownership path. Your future home is just a call away.

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