5% Down or 20% Down: The Long-Term Cost of Mortgage Insurance and Interest
At 5% down on a $500,000 house, the mortgage is $494,000, not $475,000. The $19,000 difference is the insurance premium, which gets added to the loan and accrues interest for the full amortization.
That one line changes how the two down payments compare. The inputs below are illustrative examples, not actual rate quotes from lenders. A buyer in Duncan purchases a $500,000 home on a 25-year amortization. Payments use Canadian semi-annual compounding. Only the down payment, and the rate that tends to come with it, differ.
At 5% down on a $500,000 house, the mortgage is $494,000, not $475,000. The $19,000 difference is the insurance premium, which gets added to the loan and accrues interest for the full amortization.
That one line changes how the two down payments compare. The inputs below are illustrative examples, not actual rate quotes from lenders. A buyer in Duncan purchases a $500,000 home on a 25-year amortization. Payments use Canadian semi-annual compounding. Only the down payment, and the rate that tends to come with it, differ.
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