Is Bigger Always Better?

Marci • June 1, 2012

No, bigger isn’t always better, but in the case of a down payment on a home, it is almost always better. You’ll free up more money month to month by putting a bigger chunk down at the start, but remember to set aside enough for “come what may”.

Let’s look at the difference between 5% down and 25% down on the purchase of a $500,000 home. We’ll assume there is no other debt, no strata fees, $2000 property taxes and a 3.29% rate.

At 5%, the down payment is $25,000 and the mortgage is $475,000. But wait! Because you need CMHC for default insurance, the mortgage goes up to $489,012.

This equates to monthly payments of $2,133 and required income of $90,000 a year to obtain the mortgage.

At 25%, the down payment is $100,000 and the mortgage is $400,000. No CMHC or other default insurance required.

In this case, monthly payments are $1,750 and income required to obtain the mortgage is $75,500.

But wait – These days lenders are offering better rates with less (yes, less) money down. So for this same mortgage with 5% down, you might actually qualify today for a rate of 3.19%. That equates to a monthly payment of $2,106. Which is a savings of just $25 per month and total interest savings of just $2,351 over the 5 years. (As an aside, some of you are probably shocked that .10% is such a small savings! Remember, it is not all about the rate – we’ll save that for another Blog post!)

Obviously, month to month, the larger down payment is going to be more comfortable. It frees up close to $400 a month. That being said, before you think about slapping every penny on the down payment, there are other considerations.

Life is uncertain. You can budget and plan to the nickel, but that doesn’t mean things will always go as planned.  When considering how much to put down, keep in mind that you need to cover closing costs: realtor fees if selling another house, legal fees, (about $1,000) property tax adjustments ($1,000 to $2,000) Property Transfer Taxes (1% of the first $200,000 and 2% of balance on all purchases over $425,000 – download an app to help you calculate this on iTunes (search DBM app) – plus any moving costs or fees for renovations you may need to do.

Holding back part of that money gives you the funds you need when buying an older home. If the appliances, water tank or furnace look old, you’ll need cash available. Take a look around at the house you’re buying and think about some of the extras you might buy like a riding lawnmower or a desk that fits the new office space.

After you’ve reviewed the expected, keep in mind there is always the possibility of the unexpected.

The washer could stop without warning, the cat could need surgery or you may discover carpenter ants. Things change. Relationships change and situations change. Make sure there is enough money available for the unexpected. After you’ve settled into a mortgage with a down payment that allows for an emergency fund, manageable monthly payments and a reasonable household budget, you can always apply the extra money towards the mortgage later. Most mortgages allow principal reductions of up to 20% a year as well as an increase in mortgage payments by 20% without penalty. Both methods cut the interest you pay dramatically.

Ultimately, no matter what you do – make sure you leave some breathing room and don’t tie your money up too tight.

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Bank of Canada Holds Rate at 2.25% — March 18, 2026

By Marci Deane • March 18, 2026
The Bank of Canada announced today that it is holding its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%. For anyone watching the mortgage market — whether you're renewing, purchasing, or simply keeping an eye on borrowing costs — here's a breakdown of what was announced and what it may mean for you.

Is Now the Right Time to Buy? A Look at Canada's 2026 Housing Market

By Marci Deane • March 17, 2026
For many Canadians, the dream of homeownership has felt like a moving target. After years of market volatility, shifting interest rates, and economic uncertainty, you might be wondering: is 2026 finally the year to make a move?

Everything You Should Know Before Buying a Home

By Marci Deane • March 11, 2026
Thinking About Buying a Home? Here’s What to Know Before You Start Whether you're buying your very first home or preparing for your next move, the process can feel overwhelming—especially with so many unknowns. But it doesn’t have to be. With the right guidance and preparation, you can approach your home purchase with clarity and confidence. This article will walk you through a high-level overview of what lenders look for and what you’ll need to consider in the early stages of buying a home. Once you’re ready to move forward with a pre-approval, we’ll dive into the details together. 1. Are You Credit-Ready? One of the first things a lender will evaluate is your credit history. Your credit profile helps determine your risk level—and whether you're likely to repay your mortgage as agreed. To be considered “established,” you’ll need: At least two active credit accounts (like credit cards, loans, or lines of credit) Each with a minimum limit of $2,500 Reporting for at least two years Just as important: your repayment history. Make all your payments on time, every time. A missed payment won’t usually impact your credit unless you’re 30 days or more past due—but even one slip can lower your score. 2. Is Your Income Reliable? Lenders are trusting you with hundreds of thousands of dollars, so they want to be confident that your income is stable enough to support regular mortgage payments. Salaried employees in permanent positions generally have the easiest time qualifying. If you’re self-employed, or your income includes commission, overtime, or bonuses, expect to provide at least two years’ worth of income documentation. The more predictable your income, the easier it is to qualify. 3. What’s Your Down Payment Plan? Every mortgage requires some amount of money upfront. In Canada, the minimum down payment is: 5% on the first $500,000 of the purchase price 10% on the portion above $500,000 20% for homes over $1 million You’ll also need to show proof of at least 1.5% of the purchase price for closing costs (think legal fees, appraisals, and taxes). The best source of a down payment is your own savings, supported by a 90-day history in your bank account. But gifted funds from immediate family and proceeds from a property sale are also acceptable. 4. How Much Can You Actually Afford? There’s a big difference between what you feel you can afford and what you can prove you can afford. Lenders base your approval on verifiable documentation—not assumptions. Your approval amount depends on a variety of factors, including: Income and employment history Existing debts Credit score Down payment amount Property taxes and heating costs for the home All of these factors are used to calculate your debt service ratios—a key indicator of whether your mortgage is affordable. Start Early, Plan Smart Even if you’re months (or more) away from buying, the best time to start planning is now. When you work with an independent mortgage professional, you get access to expert advice at no cost to you. We can: Review your credit profile Help you understand how lenders view your income Guide your down payment planning Determine how much you can qualify to borrow Build a roadmap if your finances need some fine-tuning If you're ready to start mapping out your home buying plan or want to know where you stand today, let’s talk. It would be a pleasure to help you get mortgage-ready.