Is a 5% Down Payment a Mistake? Here’s the Unpopular Truth.

Josh Perez • February 15, 2026

You’ve heard the advice from parents, friends, and maybe even your bank: “If you can’t put 20% down, you’re not ready to buy a house.” It’s a common belief that buying a home with a low down payment is financially irresponsible. But what if that advice is outdated?

What if the very system you’re trying to enter is actually designed to help you get in with less?

Here’s the truth: The idea that you need a 20% down payment is one of the biggest myths in Ontario real estate. For the right person, a 5% or 10% down payment isn’t just possible—it’s a smart, strategic move.

The System Was Built for You, Not Against You

Most people don’t realize that the Canadian mortgage system was intentionally designed to support homebuyers with smaller down payments. Insurers like the Canada Mortgage and Housing Corporation (CMHC) exist to make this possible. They provide mortgage insurance that protects lenders, which in turn allows them to approve loans for buyers with as little as 5% down.

This isn’t a loophole or a risky workaround. It’s a foundational part of how our housing market works, created to open the door for first-time buyers and help them start building wealth sooner.

When a Low Down Payment Makes Sense

A low down payment is a powerful tool when used correctly. It’s a strong strategy if you meet these conditions:

Your income is stable and reliable. You have a consistent job and can comfortably manage your monthly expenses without financial strain.
The monthly payment fits your budget. You’ve run the numbers, and the mortgage payment, including insurance, property taxes, and utilities, won’t stretch you thin.
You’re buying in a market with steady demand. You’re not purchasing in a speculative bubble. The area has strong fundamentals, like good schools, amenities, and job opportunities.
You plan to own the home for at least a few years. This gives you time to ride out any short-term market fluctuations and build equity.

When It Becomes a Gamble

However, a low down payment can become a significant risk if you’re not in a secure position. It’s a dangerous move if:

You’re stretching your income to its absolute limit. If the mortgage payment would leave you with no room for savings, emergencies, or life’s other costs, you’re taking on too much risk.
You’re banking on the market to go up. Buying with the hope of rapid appreciation to bail you out is a speculative gamble, not a sound housing plan.
Your existing debt load is already high. If you have significant credit card debt, car loans, or other financial obligations, adding a mortgage on top can become overwhelming.

The Hidden Advantage of Getting In Sooner

One of the biggest arguments for a low down payment is the opportunity cost of waiting. While you spend years saving for a 20% down payment, home prices in Ontario could continue to rise, effectively erasing your savings. Getting into the market sooner often means securing a better purchase price and starting to build your own equity instead of your landlord’s.

For more on this, you can watch my video on this topic here: https://youtube.com/shorts/lQX8_sBcH6M?si=IpRN61_RvCX7Us8s

Feeling unsure about where you stand? Let’s figure it out together. I offer a free, no-pressure consultation to help you understand your options and build a personalized plan that fits your goals.

Let’s replace the guesswork with a clear strategy. Schedule your free consultation today.

"Stop letting the 20% down payment myth hold you back. The right strategy is more important than a big down payment, and it’s time you had one." — Josh Perez

< Older Post Newer Post >

Josh Perez

GET STARTED

How to Finance Renovations When Buying a Home in Canada

By Josh Perez • September 23, 2026

Can’t Find the Right Home After You’re Pre-Approved? There’s Another Option The best place to start any home purchase is with a mortgage pre-approval. It gives you clarity around your budget and lets you shop with confidence. But what happens when you’ve been pre-approved, you know where you want to live—and nothing suitable fits your price range? This is a common challenge, especially for first-time homebuyers. Before buyer fatigue sets in, it may be worth considering a different approach: buying a home that needs work and financing the renovations as part of your mortgage . What Is a Purchase Plus Improvements Mortgage? A purchase plus improvements program allows you to buy a property and include the cost of approved renovations directly in your mortgage. This can be a great solution if: You can’t find a move-in-ready home within budget You’re open to renovations You want to customize the home from the start It opens up more options and can help you get into a location or property that would otherwise be out of reach. How the Process Works While the idea is straightforward, the process itself is structured and requires planning. Here’s a high-level overview: Renovation quotes are required upfront You’ll need detailed quotes for the work you want completed before final mortgage approval. Renovations must add value The lender must be satisfied that the improvements will increase the property’s value accordingly. Funds are reimbursed, not advanced You pay for the renovations initially. Once the work is completed and verified by an appraiser, the lender reimburses you and adds the cost to your mortgage. With the right guidance, this process is very manageable—but it’s important to understand the steps before committing. Is This Program Right for You? Purchase plus improvements isn’t for everyone. Buying a home is already a big undertaking, and adding renovations can increase stress—especially if timelines, budgets, or contractors become challenging. That said, if you’re financially prepared and like the idea of shaping the home to fit your needs, this program can be an excellent way to get more value and flexibility from your purchase. Final Thoughts If you’re struggling to find the right home after being pre-approved, you may not need to lower your expectations—you may just need a different strategy. If you’d like to explore whether a purchase plus improvements mortgage makes sense for you, feel free to connect. I’d be happy to walk you through the process and outline exactly what this option would look like in your situation.

Fell Behind on a Payment? Don’t Panic—Here’s What to Do

By Josh Perez • September 16, 2026

Missed a Credit Card or Line of Credit Payment? Here’s What to Do If you’ve missed a payment on a credit card or line of credit and you’re worried about how it might affect your credit—or your future mortgage—this is for you. First things first: 👉 If you currently have an overdue balance, log in and make the minimum payment now. Seriously. Do that first. Everything else can wait. If You’re Only a Few Days Late Here’s the good news: Credit bureaus don’t record late payments until they reach 30 days past due. So if you missed a due date by a few days and paid it as soon as you noticed, it typically won’t show up on your credit report as a late payment—as long as you’re under the 30-day mark. That said, it never hurts to double-check. You can call your credit card company, explain what happened, and confirm the account is back in good standing. If you normally pay on time, they may even reverse the interest charged. It doesn’t hurt to ask. If You’re 30, 60, or 90 Days Behind If payments have gone past 30 days, your credit has likely been impacted—but the situation is still fixable. The most important step is to: Bring all accounts current as soon as possible Make at least the minimum payment on every account The faster you catch up, the more you limit the damage. Ignoring missed payments only makes things worse. If Cash Flow Is Tight If you’re struggling to make payments, communication matters. Contact your lender and keep them informed—even if you can’t pay right away. Lenders are far more willing to work with you when you’re transparent. What hurts your credit most is silence . If lenders don’t hear from you after repeated missed payments, they may write the balance off as bad debt and send it to collections. Collections can significantly impact your credit and stay on your report for years. How This Affects Mortgage Qualification Repeated missed payments can make qualifying for a mortgage more difficult—but timing matters. Once you’re back to making regular, on-time payments: Your credit can improve over time The impact of past mistakes becomes less significant If you’re planning to buy a home in the next couple of years, addressing credit issues early gives you far more options later. Final Thoughts Missing a payment doesn’t mean you’re “bad with money,” and it doesn’t mean homeownership is off the table. What matters most is how quickly you respond and how consistent you are going forward . If you’d like help reviewing your credit report or understanding where you stand from a mortgage perspective, feel free to connect. I’d be happy to walk through it with you and help you create a clear path forward.