If you’re buying your first home in Ottawa, one decision you probably had to make early on was:
Should I buy sooner with 5% down… or wait until I have 20%?
My clients often struggle over this, and the answer isn’t as simple as “more is better.”
Both options can work — but they lead you down very different paths depending on your goals, your timeline, and how the Ottawa market is behaving.
What 5% Down Looks Like in Ottawa
In Canada (including Ontario), you can buy a home with as little as 5% down, depending on the purchase price. In Ottawa, where many entry-level homes are well above $500,000, the rule works like this:
- 5% on the first $500,000
- 10% on the portion above $500,000
So “5% down” often isn’t as straight forward as you might initially think.
The biggest advantage: getting into the market sooner
This is the main reason most Ottawa buyers choose this route.
If prices are rising — which we’ve seen in many parts of Ottawa — waiting to save 20% can actually put you further behind.
Buying with 5% allows you to:
- Enter the market sooner
- Start building equity earlier
- Avoid chasing rising home prices
The trade-off: mortgage insurance
If you put less than 20% down, you’ll need mortgage default insurance (often called CMHC insurance). This typically costs between about 2.8% and 4% of your mortgage and gets added to your loan.
In Ontario specifically, there’s another important detail:
You also pay 8% provincial sales tax on the insurance premium upfront at closing
That’s something a lot of first-time buyers in Ottawa don’t expect. But if buying sooner helps you secure a home and start building equity, the insurance cost can be worth it — especially in a competitive market like Ottawa.
What 20% Down Looks Like in Ottawa
Putting 20% down means you have what’s called a conventional mortgage.
The biggest advantage: no mortgage insurance
At 20% down:
- No CMHC insurance
- No Ontario HST on that insurance
- Lower overall borrowing costs
This can save you tens of thousands of dollars over time.
Lower monthly payments and more flexibility
With a larger down payment your mortgage is smaller, your monthly payments are lower, and you’ll pay less interest over time. You may also have more lender options and more flexibility with amortization and structuring.
The trade-off: time
The challenge in Ottawa is that saving 20% can take years — especially with higher home prices. And during that time, prices are guaranteed to rise, your target neighbourhood may become less affordable, and you end up delaying equity.
The Ottawa Reality: Price Points Make a Difference
In Ottawa, many homes fall into ranges where you’ll need more than just 5% down and you may still need insurance even with significant savings.
It’s also important to remember that homes over $1.5 million require at least 20% down and are not eligible for insured mortgages So your decision is often influenced by price tier, not just preference.
5% vs 20%: a Strategic Decision
Here’s the difference:
5% down tends to make sense if:
- You want to get into the market sooner
- You expect prices to continue rising
- You have stable income but limited savings
- You’re comfortable with slightly higher monthly payments
20% down tends to make sense if:
- You already have strong savings
- You want to minimize long-term borrowing costs
- You prefer lower monthly payments
- You’re not in a rush to buy
What I’m Telling My Ottawa Clients Right Now
This decision is specific to each person, their circumstances, and their goals. I’m help clients answer one key question:
What matters more for you — getting into the market sooner, or minimizing your long-term costs?
In Ottawa, waiting can cost you opportunity — BUT — rushing can cost you flexibility. The right answer depends on you.
Next Steps
There’s no “best” down payment strategy — only the one that fits your plan. I’ve helped plenty of Ottawa buyers succeed with 5% down… and others who waited and benefited from putting 20% down. Both can work.
The key is understanding the trade-offs before you decide.
If you’re trying to figure out what makes the most sense for you in Ottawa, I’m happy to walk you through both scenarios with real numbers based on your situation. Reach out to get help!
