If I Put 19% Down Instead of 20%, Do I Actually Pay More in Total?

They see that insured mortgages get lower rates — sometimes 0.30 to 0.40% lower — and assume that's the win. What they miss is that CMHC's premium doesn't come out of pocket. It gets added to your mortgage balance. Then you pay interest on it. For 25 or 30 years.

On a $700,000 home with 19% down, that premium is roughly $15,900 bolted onto your principal. The lower rate helps, but you're now financing the insurance itself. When you run the full cost of credit — not just the rate, the total interest paid over the life of the loan — the 20% option usually wins, even with a slightly higher rate.

I've had this conversation with clients who were genuinely surprised. They'd been optimizing for the mortgage rate. Once they saw the total borrowing cost side by side, the answer was obvious without me saying a word.

That premium doesn't disappear at closing. If your base mortgage is $567,000 and the premium is $15,876, your funded balance is $582,876. Day one, you're paying interest on the full amount.

There's a secondary effect most buyers overlook: the premium erodes your equity position. You think you're at 19% equity. After the premium is added to the balance, you're effectively closer to 17%. The insurance partially gives back what you put down.

If you're choosing a 30-year amortization, the CMHC math compounds.

Lenders charge roughly 0.05–0.25% more for 30-year terms. That applies whether you're insured or not. But first-time buyers on insured 30-year mortgages also pay an additional 0.20% CMHC surcharge — so the premium itself goes up.

On a $700K purchase with 10% down, that surcharge adds about $1,134 to your balance before you make a single payment.

The monthly payment on a 30-year is lower — sometimes $300–$350 less. But the total interest cost over the life of the loan is typically $80,000–$100,000 higher. That's not a rounding error. You can see the full breakdown in my cost of borrowing guide.

On December 15, 2024, the federal government raised the insured mortgage cap from $1 million to $1.5 million. Buyers in high-cost markets can now purchase with less than 20% down at price points that previously required a full 20%.

That's a meaningful change for access. It doesn't change the underlying math.

On a $1.2M purchase at minimum down, the CMHC premium runs about $44,200. That goes on your mortgage. Whether the insured rate offsets that over your actual holding period depends on your numbers, not the headline rate.

It's not a trick question. Sometimes it's the right call.

If you're buying a $500K home with $100K saved, putting 10% down and keeping $50K liquid isn't reckless — it's a cash flow decision. Emergencies are real. Liquidity has value. The question is whether you're choosing 10% down because it's the right financial decision or because you're avoiding doing the math.

If the gap is only 1% — $133,000 vs $140,000 on a $700K home — and you have the extra $7,000 available, put it down. You eliminate the premium entirely, reduce your principal, and lower your total interest. The rate comparison is beside the point.