Real Estate

5% downpayment - Any difficulties?

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  • Feb 12th, 2019 2:10 pm
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[OP]
Deal Addict
Jul 12, 2008
4368 posts
1259 upvotes
GTA

5% downpayment - Any difficulties?

With strong established income and relatively low debt (easily meet all TDS and GDS requirements), are there any current issues putting down 5% for a mortgage? apart from the stress test rate required since it is under 20% downpayment and that some lenders like credit unions like bigger downpayments in the 10 to 15% range.

Is 5% for a new mortgage relatively doable still today?
7 replies
Deal Addict
Dec 18, 2006
2010 posts
420 upvotes
Markham
Depending on your purchase price and loan value, the monthly amount for the loan would likely be quite high, considering the CMHC fees and only getting a 25yr amortization vs a 30yr amortization and no CMHC fee with a 20% down payment.

Have you spoken to a mortgage broker for your options and comparison in rates as well as which lenders would be willing to work with you based on your purchase price etc? You may want to at least do a free consult with one.

Good luck!
Jay Rana | 🌱 the vegan realtor
Broker, CENTURY 21 Titans Realty Inc. Brokerage
Deal Fanatic
User avatar
Feb 2, 2014
9914 posts
2794 upvotes
Toronto
badmus wrote: With strong established income and relatively low debt (easily meet all TDS and GDS requirements), are there any current issues putting down 5% for a mortgage? apart from the stress test rate required since it is under 20% downpayment and that some lenders like credit unions like bigger downpayments in the 10 to 15% range.

Is 5% for a new mortgage relatively doable still today?
All “A” lenders are ok with 5% down.

Keep in mind, it’s min. 5% for the first $500k and 10% down on increments above that.

Also, it’s min. 20% down for properties over $1M.
Kevin Somnauth, CFA
Principal Broker - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative
Deal Addict
Jul 21, 2008
1523 posts
1649 upvotes
GTA
badmus wrote: With strong established income and relatively low debt (easily meet all TDS and GDS requirements), are there any current issues putting down 5% for a mortgage? apart from the stress test rate required since it is under 20% downpayment and that some lenders like credit unions like bigger downpayments in the 10 to 15% range.

Is 5% for a new mortgage relatively doable still today?
Remember that a down payment anywhere from 5-9.9%, CMHC will charge you 4% of the total purchase price of the home and roll it into your mortgage.
Deal Guru
Feb 22, 2011
11517 posts
14766 upvotes
Toronto
Slono wrote: Remember that a down payment anywhere from 5-9.9%, CMHC will charge you 4% of the total purchase price of the home and roll it into your mortgage.
You do get lower mortgage rates for the life of the mortgage though. Not to mention being able to buy sooner which avoids rent expense.
Deal Addict
Jul 21, 2008
1523 posts
1649 upvotes
GTA
sircheersa wrote: You do get lower mortgage rates for the life of the mortgage though. Not to mention being able to buy sooner which avoids rent expense.
Only the OP would know if the numbers work. Mortgage numbers will look dramatically different with 20% down vs. a CMHC insured 5% down.

The lender will also most likely ask for every document under the sun pertaining to your income and assets to prove you can “support” the mortgage.
Deal Addict
Mar 20, 2017
1366 posts
1156 upvotes
sircheersa wrote: You do get lower mortgage rates for the life of the mortgage though. Not to mention being able to buy sooner which avoids rent expense.
Using CMHC insurance is generally more expensive, considering all factors involved and discounted rates.
Deal Addict
Dec 6, 2017
1500 posts
997 upvotes
Manitoba
How about for people who have already got CMHC on their mortgage? Any LPT on how to use that to their advantage moving forward?

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