For many Ontarians, the biggest obstacle to buying a home isn’t finding the right property; it is saving enough for the down payment. Even the minimum 5% can feel hard to raise when housing prices rise faster than wages and daily living costs.

That pressure pushes some buyers to consider low down payment options, including what is referred to as a zero down mortgage. In this arrangement, the full purchase price is financed without upfront cash.

The appeal is clear: a faster entry into the market. However, with that opportunity also comes challenges. So, how do you find your way? This blog discusses the four key pros and cons that reveal both sides of this important decision.

The 4 Pros of a Low Down Payment

Below are the major advantages that a low down payment gives to buyers:

  1. Faster entry into the market: Saving tens of thousands for a down payment can take years. During that time, prices often climb higher. A zero down mortgage allows buyers to step in sooner, securing a home before costs rise further.
  2. Building equity earlier: Rent payments vanish each month with nothing to show for them. Purchasing with a high-ratio mortgage, even with little or no down payment, turns those same monthly payments into progress toward home ownership. Equity grows steadily, thus offering value that renting can never create.
  3. Flexibility with cash flow: A smaller down payment keeps more money in hand. Buyers can set aside funds for moving costs, unexpected repairs, or an emergency cushion. For many, that financial breathing room provides stability in the early years of homeownership.
  4. Accessibility for first-time buyers: Young Canadians already face high rents, student loans, and daily living expenses. Saving for a full down payment feels nearly impossible. A zero down mortgage removes that barrier and provides first-time buyers a fair chance to compete in a busy housing market.

The 4 Cons of a Low Down Payment

Below are the setbacks that come alongside low down payments:

  1. Higher monthly payments: Financing more of the purchase price leads to heavier obligations each month. For example, a buyer who chooses a zero down mortgage commits a larger payment than someone with a substantial deposit. Higher costs can strain budgets, especially in provinces where living expenses continue to rise.
  2. Mortgage insurance requirement: Low down payment financing comes with added conditions. With a high-ratio mortgage, lenders demand protection against risk. This protection takes the form of mortgage insurance, a cost paid by the buyer. Premiums are rolled into the loan, which makes the overall mortgage more expensive.
  3. Greater long-term interest: Borrowing more means paying more over time. A zero down mortgage requires borrowers to extend their payments over multiple years while accumulating additional interest costs. The total paid can be substantially higher than a traditional down payment.
  4. Market risk: A thin equity cushion leaves buyers exposed. If property values decline, they may owe more than the home’s worth. For Ontario homeowners with a high-ratio mortgage, recovering from that situation can take years. Combined with mortgage insurance costs, the financial setback can feel even heavier.

How Northwood Mortgage Can Help You Qualify for a Zero Down Mortgage

Various lenders often offer different rules, interest rates, and conditions that are not always easy to compare. However, with the help of a broker, the narrative changes.

Northwood Mortgage works for the buyer and not the bank. Our team of expert mortgage brokers helps first-time homebuyers explore and qualify for zero down mortgage solutions.

We explain the terms that come with it, as well as the benefits, the disadvantages, the impact of mortgage insurance, and much more. We then proceed to negotiate the best terms on high-ratio mortgage products across our pool of various lenders.

Speak with Northwood Mortgage at 888-495-4825 or contact us online to start your path to homeownership. Our team will connect you with the best lenders, negotiate strong terms, and guide you every step of the way.