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 But what if that advice is outdated?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
Josh Perez
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Employment and Mortgage Qualification: What Lenders Look For

By Josh Perez • February 11, 2026
When you apply for a mortgage, your employment history and status carry a lot of weight. Even if you feel secure in your job, lenders need proof that your income is reliable and will continue. To them, your employment status is one of the strongest indicators of whether you can make your mortgage payments long term. Here’s how lenders typically view different employment situations: Permanent Employment This is the gold standard. Once you’ve passed any probationary period and hold permanent status, lenders see you as a lower risk. It shows that your employer is committed to you, and your income is steady. Probationary Periods If you’re still on probation—usually 3 to 6 months, though sometimes longer—lenders may hesitate. That’s because your employer can end your contract without cause during this period. Once probation is over, you’re considered more secure. That said, context matters. If you’ve worked with the same company for years as a contractor and just transitioned into full-time employment, lenders may accept a letter from your employer confirming that probation is waived. Documentation is key here. Parental Leave Being on or about to take parental leave doesn’t mean you can’t qualify for a mortgage. As long as you have a letter from your employer guaranteeing your position and return-to-work date, lenders can use your regular salary—not your leave income—when assessing your application. Term Contracts This is one of the trickiest categories. Even highly skilled professionals with strong incomes can face challenges here. A term contract has a start and end date, which makes lenders question the stability of your future income. To use term-contract income, lenders generally want to see at least two years of history, or proof that your contract has already been renewed. The more evidence you can show of consistent employment, the stronger your case will be. The Bottom Line If you’re planning to apply for a mortgage, it’s important to understand how your employment status could affect your approval. Whether you’re starting a new job, coming back from leave, or working under contract, lenders want documentation that proves your income is reliable. 📞 If you’ve recently changed jobs or are planning a career shift, let’s connect. I can help you prepare your file so you qualify with confidence and avoid surprises in the approval process.
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Is Real Estate in Ontario Still Affordable? Here's the Truth.

By Josh Perez • February 8, 2026
Feeling priced out of the Ontario real estate market? Discover a personalized framework that has helped over 1,000 people buy homes. Get your homebuyers plan.