How Much Should I Put as a Down-Payment on my Home?

You should put down no less than 20% of the purchase price of your home as a down payment. No arguing. No exceptions. You could put considerably less cash down and still find a bank willing to loan you up to 95% of the purchase price. But it’s always a bad idea. Here's why.

If you put any less than 20% down, you’ll have to pay what’s called CMHC insurance, short for Canadian Mortgage Housing Corporation insurance, which gets tacked on to the cost of your mortgage. Why? Because the CMHC is getting paid to assume the bank’s risk, and anyone who can't (or just doesn't) put at least 20% down is viewed as a bigger risk — a greater chance of not being able to afford monthly payments or defaulting. The insurance premiums are normally paid by your bank and then baked into your monthly mortgage payment, effectively making your total interest rate higher; and the more you borrow, the more you’ll pay as insurance. If you borrow the maximum amount allowable, you'll be adding 3.6% to your mortgage rate.

One more point: don't buy more house than you can afford. The debt you take on shouldn't be greater than two and a half times your income. So if your income is $100,000, you shouldn't borrow more than $250,000.