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How does down payment affects mortgage payments?

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December 11, 2017 - Karl Yeh

When you are calculating your down payment for a home, you definitely want to know how this impacts your future mortgage payments. In this episode, we discuss how your down payments affect your mortgage, what's the minimum down payment before a mortgage must be insured and premiums for insured mortgages. 

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So, hi everyone, and welcome to another edition of Homebuyer's School. Today I'm joined by  Troy Champ, a Mortgage Advisor with Mortgage Tree, and today the question that we're going to answer is: 

How does down payment affect your mortgage payments? 

Troy Champ:     

Well, obviously, the more money you put as down on your house, the lower your mortgage amount's going to be, so the lower your mortgage monthly payments will be.

But beyond that, the more money you put as a down [00:00:30] payment as a percentage of your purchase price, the lower your insurance premiums are going to be.

Karl Yeh:              Okay.

Troy Champ:     

So, in Canada, if you're buying a house with less than 20% down, you must have the mortgage insured through CMHC [Canada Mortgage Housing Corporation], CG [Canada Guaranty], or Genworth.

Those are the three insurers in Canada.

Karl Yeh:              Okay.

Troy Champ:     

They charge a premium, which is added into your mortgage, and it's calculated based on the percentage of down payment you have.

Karl Yeh:              Yeah.

Troy Champ:     

So, if you have 5% down payment, they charge you a 4% fee into your mortgage.

So, if you can get to a 10% down payment, that amount drops to 3.1%.

Karl Yeh:             

And [00:01:00] if you can get to 20%, there's a-

Troy Champ:      It goes to zero.

Karl Yeh:              Is there anything else you want to add?

Troy Champ:      I think that's it.

Karl Yeh:             

Perfect. Well, thank you very much, Troy. Thank you very much everyone for joining us, and we'll catch you next time.


Your turn:

Let us know if you have additional homebuying questions that we can answer by submitting them in the comments section below. 

Homebuyer's School publishes new content weekly so subscribe or check back regularly for the latest information, strategies and tips from homebuying experts. 

About Troy Champ:

Troy is one of those uniquely capable mortgage experts who has refined his craft over 17 years of experience with two of Canada’s major financial institutions and then one of the largest mortgage brokerage firms in Western Canada. He is amongst a rare group of professionals who have funded over $500 million in mortgages over his career and received many top level awards for excellence.

A hallmark of Troy’s service pledge is unparalleled availability. While many will say they provide great service, Troy proves it day in day out without question. His clients are never left waiting for answers to their enquiries. Quite simply, his clients are thrilled to work with someone who says what they do and does what they say.

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