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 But what if that advice is outdated?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

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Down Payment Options for Canadian Homebuyers

By Josh Perez • July 1, 2026

For most Canadians, the down payment is the biggest hurdle to homeownership. A down payment is the initial amount you contribute toward your property purchase, while the lender covers the rest through a mortgage. By law, Canadian lenders can only finance up to 95% of a property’s value, which means you’ll need at least 5% down to qualify. If you’re putting down less than 20%, your mortgage must be insured through one of Canada’s three default insurance providers— CMHC, Sagen (formerly Genworth), or Canada Guaranty . This insurance comes at a cost, but it can be rolled into your mortgage amount. The less you put down, the higher the premium. Since saving a down payment can feel overwhelming, it helps to know the different sources you can draw from. Here are the most common options available to Canadian homebuyers: 1. Savings & Personal Resources The most straightforward source is your own savings. Lenders will ask to see a 90-day history of the funds in your account. Any large deposits outside of regular payroll must be explained with documentation—such as the sale of a vehicle or a transfer from an investment account. This requirement isn’t just red tape; it’s part of Canada’s anti-money laundering rules. 2. Proceeds from the Sale of a Property If you’ve recently sold another home, you can use the proceeds as a down payment on your new purchase. Proof of the sale—such as the final statement of adjustments from your lawyer—will be required. 3. RRSP Home Buyers’ Plan (HBP) First-time buyers can withdraw up to $35,000 each (or $70,000 as a couple) from their RRSPs to put toward a down payment under the federal Home Buyers’ Plan . The funds are withdrawn tax-free, but they must be repaid over a 15-year period. This is a popular option for buyers who have been steadily contributing to their retirement savings. 4. Gifted Down Payment With today’s housing prices, many buyers turn to family for help. A parent or immediate family member can provide a gift that makes up part—or even all—of the required down payment. The lender will require a signed gift letter confirming that the money is a true gift (with no repayment expected) and proof that the funds have been deposited into your account. 5. Borrowed Down Payment In some cases, you may be able to borrow your down payment. This option is usually available only if you have strong credit and sufficient income. The payments on the borrowed funds are factored into your debt service ratios, so affordability is key. Lenders typically use 3% of the outstanding balance when calculating the additional payment. The Bottom Line A down payment doesn’t have to come from just one source—it can be a combination of savings, gifted funds, RRSPs, or other resources. What matters most is being able to show where the money came from and that it meets lender requirements. If you’d like to explore your options or learn how much you might qualify for, it’s never too early to start the conversation. Connect with us today—we’d be happy to help you create a plan and take the first steps toward homeownership.

What to Expect in the Closing Process: A Step-by-Step Guide

By Josh Perez • June 24, 2026

You’ve found the right home, your offer’s been accepted, and your financing is approved—congratulations! But before you can pick up the keys and celebrate, there’s one more important stage: the closing process. Closing is the final step in your homebuying journey, where all the paperwork, legal details, and financial transactions come together. It can feel overwhelming if you don’t know what to expect, but with the right preparation, closing can be smooth and stress-free. Here’s a step-by-step guide to help you understand the process. Step 1: Hire a Lawyer or Notary A real estate lawyer (or notary, depending on your province) handles the legal side of closing. They will: Review the purchase agreement and mortgage documents Conduct a title search to confirm the seller has the legal right to sell the property Ensure the mortgage lender is properly registered on the title Handle the transfer of funds between you, the lender, and the seller Your lawyer or notary will be your main point of contact during closing, so choose one you trust and who communicates clearly. Step 2: Finalize Your Mortgage Your lender will send the mortgage instructions directly to your lawyer or notary. At this stage: You’ll provide proof of property insurance (lenders require this before releasing funds) You’ll confirm your down payment and closing costs are available in your lawyer’s trust account The lawyer will prepare all documents for your review and signature Step 3: Pay Closing Costs Closing costs typically range from 1.5% to 4% of the purchase price. These can include: Legal fees Title insurance Land transfer tax (where applicable) Adjustments for property taxes or utilities prepaid by the seller Home inspection or appraisal fees (if not already paid) Your lawyer will provide a final statement of adjustments so you know exactly how much is due on closing day. Step 4: Sign the Paperwork A few days before closing, you’ll meet with your lawyer or notary to sign all the necessary documents, including: Mortgage agreement Title transfer Insurance confirmations Statement of adjustments Bring valid government-issued ID to this appointment. Step 5: Transfer of Funds On the day of closing: Your lender sends the mortgage funds to your lawyer Your lawyer combines these funds with your down payment and pays the seller Legal ownership of the property is transferred into your name The lender is registered on title as a secured creditor Step 6: Get the Keys! Once the paperwork is filed and the funds have cleared, your lawyer will confirm that the transaction is complete. You’ll then get the keys to your new home—officially making it yours. The Bottom Line The closing process is a series of important steps, but with the right team in place, it doesn’t have to be stressful. By working closely with your mortgage professional and lawyer, you’ll have guidance every step of the way—from signing the documents to turning the key in the front door. If you’d like help preparing for the closing process—or want a clear breakdown of your own closing costs— connect with us today.