Why Waiting for a 20% Downpayment Can Hold Your Clients Back

Many clients still believe they should delay buying a home until they’ve saved a 20% downpayment. That rule of thumb made sense in a different market, but today it can work against long-term wealth planning. Financial advisors who understand how insured, insurable, and uninsured mortgages are priced can guide clients toward better timing, lower borrowing costs, and smarter use of their capital.

Clients Don’t Need 20% to Access the Lowest Rates

Clients with less than 20% downpayment qualify for insured mortgages. The premiums paid to CMHC, Sagen, or Canada Guaranty for default insured mortgage products absorb the lender’s risk. The premiums add to the loan amount, but the lower rate often shortens the breakeven point compared to waiting years to reach the 20% downpayment mark. For many buyers, especially those with rising rents or salary-indexed income growth, acting earlier builds equity faster and anchors their housing costs in a period of rate volatility. Advisors can model the difference between buying now with a smaller downpayment versus waiting, and the results often surprise clients who assumed the 20% threshold always leads to savings.

Home Appreciation May Outpace Your Client’s Savings Rate

The other strategic angle is inflation and housing price growth. Even a moderate 1% in annual home appreciation can outpace a client’s savings plan. Advisors see this regularly when clients try to save an extra 10% or 15% while the market moves faster than their bank account. Early entry at today’s insured or insurable rates can preserve mortgage and housing affordability and open the door to later refinancing when equity builds and rates fall. The key message is that the downpayment strategy is not a moral virtue test. It is a financial planning choice tied to rate structure, risk, and the client’s time horizon.

Looking through a macroeconomic lens, buying sooner with a smaller downpayment can help clients secure lower insured rates. At the same time, the Bank of Canada signals that further cuts will depend on its progress toward its inflation target. Homebuyers may benefit from acting before fixed rates reprice; renewers can plan for lower break-even costs later in the cycle; and homeowners looking to refinance can build equity earlier, so they are better positioned when the next round of monetary tightening reshapes borrowing costs.

For support comparing insured, insurable, and uninsured options for your clients, partner with nesto mortgage experts to integrate optimal financing strategies into your financial planning workflow. 

Partner with nesto mortgage experts to integrate personalized financing solutions into your client strategies. Together, we can make responsible borrowing a cornerstone of long-term wealth creation and foster client confidence.

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Why Choose nesto

At nesto, our commission-free mortgage experts, certified in multiple provinces, provide exceptional advice and service that exceeds industry standards. Our mortgage experts are salaried employees who provide impartial guidance on mortgage options tailored to your needs and are evaluated based on client satisfaction and the quality of their advice. nesto aims to transform the mortgage industry by providing honest advice and competitive rates through a 100% digital, transparent, and seamless process.

nesto is on a mission to offer a positive, empowering and transparent property financing experience – simplified from start to finish.

Contact our licensed and knowledgeable mortgage experts to find your best mortgage rate in Canada.

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