If you’ve been saving for a home and have a 20% down payment, you may qualify for a conventional mortgage. While recent mortgage rule changes have made it easier for some Canadians to purchase with less than 20% down, there are still many advantages to putting down 20% or more.
As a mortgage broker in Kelowna, I help buyers compare all of their financing options to determine which mortgage best fits their financial goals. Let’s dive into conventional mortgages and whether or not you should go this route.
A conventional mortgage is a mortgage where your down payment is 20% or more of the home’s purchase price. Because you’re borrowing no more than 80% of the home’s value, mortgage default insurance is generally not required.
This differs from a high-ratio (insured) mortgage, where buyers put down less than 20% and typically pay a mortgage default insurance premium that is added to the mortgage amount.
Like I just touched on, one of the biggest advantages of a conventional mortgage is avoiding mortgage default insurance premiums. Since these premiums are usually added to your mortgage balance, avoiding them can save you thousands of dollars over the life of your mortgage. Who doesn’t like savings!
With a larger down payment, you’re borrowing less money. This can often result in lower monthly mortgage payments and less interest paid over the life of your loan. Of course it depends on your situation, mortgage amount and whether you’re with an A, B or private lender. Each situation is unique, which means it’s important to discuss before moving ahead with a mortgage option.
Starting with 20% or more equity means you own a larger portion of your home from day one. Building equity more quickly can provide greater financial flexibility for future renovations, investments, or other borrowing needs.
Many lenders allow homeowners with sufficient equity to access a Home Equity Line of Credit (HELOC). A HELOC lets you borrow against your home’s equity when needed and can be useful for home improvements, debt consolidation, education expenses, or other major purchases.
Eligibility and borrowing limits vary by lender, but having a conventional mortgage often provides greater flexibility to access your home’s equity.
Conventional mortgages can also offer additional refinancing opportunities. Whether you’re looking to renovate your home, consolidate higher-interest debt, or access equity for another investment, lenders provide more flexible refinancing options for homeowners with significant equity.
As a mortgage broker, I work with a variety of lenders to help you find financing solutions that align with your long-term financial goals.
Many buyers assume they need a 20% down payment to purchase a home, but that’s no longer the case.
Today, qualified buyers can purchase homes with less than 20% down in many situations, and insured mortgages are now available for eligible homes with purchase prices of up to $1.5 million, provided minimum down payment requirements and lender qualifications are met.
This means buyers have more options than ever before.
While an insured mortgage may be the right choice for someone who wants to buy sooner with a smaller down payment, a conventional mortgage can still provide significant long-term savings by eliminating mortgage insurance premiums and offering greater flexibility with refinancing and equity access.
The right choice depends on your financial situation, future plans, and homeownership goals.
Whether you’re purchasing your first home, upgrading to a larger property, refinancing, or buying an investment property, Mortgage Okanagan can help you compare lenders and find the mortgage solution that works best for you.
We’ll explain the differences between conventional and insured mortgages, review your financing options, and help you choose a mortgage that supports your financial goals.
Ready to explore your mortgage options? Contact me today to find out whether a conventional mortgage is the right fit for you. Give me a call at 250-826-3111, apply through my website, or contact me via my online contact form.
Let’s get your application off the ground.
