Mortgage Myths You Still Believe (Starting With 20% Down)

You do not need 20% down to buy a home in Brampton. Neha Joneja, Mortgage Agent Level 2, explains that homes under $1.5 million can be bought with as little as 5% down, and that pre-qualification, bank offers, self-employment, newcomer status, renewals and agent compensation are widely misunderstood too.

A lot of mortgage advice gets passed around at family dinners and in group chats. Some of it was never true, and some of it keeps good buyers renting longer than they need to. Here are six common myths, and what the rules actually say.

Do you really need 20% down to buy a home?

No. Twenty percent is the point where you no longer need mortgage default insurance. It is not the minimum. Under federal rules, you need 5% on the first $500,000 of the purchase price and 10% on the portion from $500,000 up to $1,499,999. Only homes priced at $1.5 million or more require 20%, because they can’t be insured.

The trade-off is the insurance premium. For example, a buyer purchasing a $700,000 home with the $45,000 minimum would borrow $655,000, a loan-to-value (LTV, the mortgage as a share of the home’s value) of about 93.6%. The CMHC premium at that level is 4.00%, or $26,200, which is usually added to the mortgage. In Ontario, the 8% PST on that premium, $2,096 in this example, is paid in cash at closing and can’t be added to the loan.

If you’re a first-time buyer, you can now choose a 30-year amortization on an insured mortgage, which lowers the monthly payment. That adds 0.20% to the premium, so it’s worth running the numbers both ways.

Saving the full 20% avoids the premium entirely, but it can also take years. Many Brampton buyers combine savings with a First Home Savings Account (up to $8,000 a year, $40,000 lifetime) and the RRSP Home Buyers’ Plan (up to $60,000 per person), and both can be used for the same home. In multi-generational households, many lenders also accept a gifted down payment from immediate family with a signed gift letter.

Minimum down payment & CMHC insurance estimator

For illustration only. Not a rate quote or an approval.

Purchase price ($)Down payment ($) 30-year amortization (first-time buyers and new builds only)

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Approval subject to lender criteria (O.A.C.). Rates subject to change. Figures are estimates for illustration only.

If I’m pre-qualified, does that mean I’m approved?

Not quite. A pre-qualification is a quick estimate based on what you tell a lender or agent. Nobody has verified your income, checked your documents or looked at the property.

A pre-approval goes further: your credit is reviewed, your income and down payment documents are checked, and many lenders will hold a rate for a set period. It’s a much stronger starting point, which is why I recommend getting one before you book showings. You can read more on my mortgage pre-approval page.

Even a pre-approval isn’t the final word. Once you have an accepted offer, the lender reviews the specific property, usually through an appraisal, and confirms every document again. This is where Brampton details matter. If you’re counting on rent from a basement apartment to help you qualify, many lenders will want to see that it’s a legal second unit, and some will only count part of the rent. Keep a financing condition in your offer whenever you can, so a surprise at this stage doesn’t put your deposit at risk.

Is your bank’s offer the best one you’ll get?

It might be good, but it’s only one offer. A bank can only lend its own money under its own rules. As a Mortgage Agent Level 2, I can compare options from major banks, credit unions, alternative (B) lenders and, when a file needs it, private lenders.

The rate is also only part of the picture. Two mortgages at a similar rate can behave very differently once life happens. Before you sign anything, compare:

• Prepayment privileges: how much extra you can pay each year without a penalty.
• Penalty method: on fixed mortgages, lenders calculate the interest rate differential (IRD) in different ways, and the difference can be large if you break early.
• Portability: whether you can take the mortgage with you if you sell and buy again.
• How the mortgage is registered on title: some registrations make it harder to switch lenders later.

If any of these terms are new, my guide to mortgage lingo, translated explains each one in plain language.

Can self-employed buyers and newcomers get a mortgage?

Yes, in many cases, subject to lender criteria. These are two of the most common situations I see in Brampton.

If you’re self-employed, whether you run a trucking business, a shop or a consulting practice, lenders typically look at your last two years of T1 Generals and Notices of Assessment. Write-offs that lower your tax bill also lower the income a lender sees, so timing and documentation matter. Insured options exist with traditional documentation, and alternative (B) lenders offer stated-income or alternative documentation programs when your declared income doesn’t tell the whole story. My self-employed mortgage page covers the documents in detail.

If you’re new to Canada, many lenders accept as little as 5% down for permanent residents and work-permit holders within about five years of arrival. Without a long Canadian credit history, rent receipts, utility bills or an international credit report can help. Some lenders ask for 10% or more for work-permit holders, so the right lender makes a real difference. See my newcomer mortgage page and the article newcomers can get a mortgage too.

At renewal, are you stuck with your current lender?

No. When your term ends, you can renew with your lender, negotiate, or move your mortgage to a different lender without paying a prepayment penalty. Your lender will usually send a renewal letter before maturity, and many people simply sign it. That letter is an offer, not an obligation.

A straight switch, meaning the same mortgage amount and the same remaining amortization, generally doesn’t require you to re-qualify at the stress-test rate. That’s OSFI’s position for uninsured mortgages, and the federal government extended the same treatment to insured mortgages in November 2024. If you want to borrow more or stretch the amortization, that becomes a refinance, and full qualification applies.

Start several months before your maturity date, so there’s time to compare offers and handle the paperwork. My pages on mortgage renewal in Brampton and switching mortgage lenders in Ontario walk through the steps.

Does using a mortgage agent cost you more?

For most people, no. On most standard residential mortgages, the agent is compensated by the lender when the mortgage funds, so in most cases there is no separate fee to you for arranging it.

Fees can apply on some private or complex files, for example when a private lender is involved or a file needs extra structuring. When that happens, any fee is disclosed to you upfront, before you commit to anything, so you can decide with full information. You can read how I’m licensed and how compensation is disclosed on my licensing and disclosures page.

Instead of applying separately at several banks, you work through one agent who compares lenders for you. If you’d rather talk it through in Hindi or Punjabi, see my page for a Punjabi and Hindi mortgage agent in Brampton.