How Much Do You Really Need to Buy a Home? Let’s Break It Down

Thinking about buying your first home? You’re not alone—and you’re probably hearing a lot of buzzwords like “down payment,” “mortgage insurance,” and “20% rule.” But how much money do you actually need before you can start house hunting?

Don’t worry. We’re here to walk you through the real numbers and your options, no confusing jargon, no pressure. Just the facts in plain language.

What Is a Down Payment, Anyway?

A down payment is the chunk of money you pay upfront when buying a home. It’s your skin in the game, and the rest? That’s where your mortgage comes in.

Think of it like a balancing act: you pay part of the cost, and your lender covers the rest. The more you put down, the less you’ll need to borrow. Sounds simple, right? But here’s where it gets interesting.

Option 1: 20% Down – The Conventional Route

If you want to avoid mortgage insurance, you’ll need to put 20% down.

For example, on a $670,000 home, that’s $134,000 upfront.

• The benefits?
• No CMHC insurance premiums
• Lower monthly payments
• More equity right from day one

It also shows lenders you’re financially stable, which could help you qualify for better mortgage terms.

Option 2: Less Than 20% – CMHC-Insured Mortgages

Don’t have $134K lying around? You’re not alone, and good news: you can still buy a home. With a CMHC-insured mortgage, you only need:

• 5% down on the first $500,000
• 10% down on the amount above that

So, for a $670,000 home, that breaks down to:

• 5% of $500,000 = $25,000
• 10% of $170,000 = $17,000

Total down payment = $42,000

This makes homeownership more accessible, especially for first-time buyers. But, as always, there’s a trade-off.

The Catch: CMHC Insurance

If you’re putting down less than 20%, you’ll pay a CMHC insurance premium. It’s a one-time cost added to your mortgage to protect the lender if you default.

For a 5% down payment on a $670,000 home, here’s how the numbers might look:

• Mortgage = $628,000
• Insurance premium (~4%) = $25,120
• Total mortgage = $653,120

That added cost bumps up your monthly payments.

• Monthly Payments: 20% vs 5%

Here’s a quick comparison based on today’s rates:

• 20% down: ~$3,133/month
• 5% down + CMHC insurance: ~$3,538/month

That’s a $400 difference every month which can really add up over the years. But the upside? You could be in your new home a lot sooner with a smaller down payment.

The Bottom Line: What’s Right for You?

There’s no one “right” way to buy a home. If you’ve saved a larger down payment, you’ll save on interest and insurance. If you’re eager to buy now and can afford the monthly payments, a smaller down payment might be your way in. The key is to know your options, run the numbers, and make a decision that fits your lifestyle and goals.

Ready to Start Your Journey?

Whether you’re months away or just starting to dream about it, understanding your down payment options is the first big step. Talk to your lender, do your homework, and take that next step with confidence.

Because your future home? It starts with a smart plan. Let’s make yours real.