5% Down vs 20% Down: The Honest Math Nobody Shows You

Almost every first-time buyer hears some version of the same advice: "save 20% down to avoid CMHC insurance." It sounds responsible. It feels like the grown-up choice. And in a lot of cases, especially in the GTA in 2026, it's the worst financial advice you'll get all year.

Here's the math nobody shows you.

What 5% down actually costs

Let's say you're buying a $600,000 condo in Mississauga.

With 5% down ($30,000), your mortgage starts at $570,000 plus a 4.00% CMHC insurance premium of $22,800, for a total mortgage of $592,800. At a 5.04% rate over 25 years, your monthly payment is about $3,460. You pay PST on the CMHC premium at closing (Ontario, 8% of $22,800 = $1,824), and that's it.

With 20% down ($120,000), your mortgage is $480,000, no CMHC. At the same rate and amortization, your monthly payment is about $2,800. You save $660 a month, and you avoid the $22,800 insurance premium and the $1,824 PST.

So the 20% buyer is winning, right? Not so fast.

The thing nobody calculates: the cost of waiting

To save the extra $90,000 ($120K minus $30K), the 20% buyer needs time. If they're saving $1,500 a month aggressively, that's five years. During those five years, two things happen that calculators ignore:

You spent five years saving toward a moving target. The price went up faster than your savings. By the time you've saved "enough," the goalposts have moved $19,000 further away. Meanwhile, the buyer who put 5% down five years ago has paid down maybe $40,000 of principal AND captured $95,500 of appreciation, all while paying roughly the same amount per month they would've paid in rent.

When 20% down really is the right call

I'm not telling you 5% is always better. There are real situations where 20% wins:

You already have the money. If you've inherited it, sold something, or genuinely have it sitting in a savings account today, putting it down avoids the CMHC premium and lowers your monthly payment. There's no waiting cost because you didn't have to wait.

Your monthly cash flow is tight. CMHC insurance gets baked into your mortgage, which means the 5% buyer pays interest on it for 25 years. If your budget is already tight, the lower monthly payment from 20% down might be the difference between "house feels good" and "house feels suffocating."

You're buying somewhere with flat or falling prices. If you're in a market where prices have actually been declining or have been flat for several years, the "cost of waiting" disappears. The math swings back in favour of patience.

You're not staying long. If you're going to sell within five years, the CMHC premium hurts more because you don't have time to amortize it. Higher down payment makes more sense.

The middle ground nobody talks about

You don't have to pick 5% or 20%. The CMHC premium scales: at 10% down it drops to 3.10%, and at 15% down it drops to 2.80%. So putting 10% or 15% down often gets you into the home years earlier than waiting for 20%, with a much smaller insurance bill than 5% down. For most first-time buyers I work with in the GTA, 10% to 15% is the actual sweet spot, not the bumper-sticker numbers at either end.

The right answer for you depends on your timeline, your local market, your other savings, and how much your monthly budget can stretch. There is no universal answer. There is only your number.