Insured mortgage, or borrow to reach 20% down?
Below 20% down, a mortgage insurance premium of 2.8% to 4% is added to what you borrow. Borrowing the gap to 20% on a line of credit avoids it, but brings its own interest. This estimates which costs less over your first term, with the same monthly budget for both, and what you would still owe at the end. Nothing you enter leaves your browser.
The purchase
Rates
Starting rate: our 5-year fixed estimate, updated October 5, 2026. Not an offer. Where it comes from
Compare after
Estimate · financing cost over 3 years
Borrowing to reach 20% comes out about $12,193 lower
Based on the information entered, the insured path costs about $84,550 over 3 years in premium, sales tax and interest, and the borrowed path about $72,357 in mortgage and line of credit interest. At that point you would owe about $479,211 with the insured mortgage and $468,357 with the borrowed one.
A · Insured mortgage
B · Borrow to reach 20%
Total owed, year by year
| After | A · Insured | B · Borrowed | Owes less |
|---|---|---|---|
| 1 year | $531,988 | $517,390 | B $14,598 less |
| 2 years | $506,161 | $493,533 | B $12,628 less |
| 3 years | $479,211 | $468,357 | B $10,854 less |
Estimate based on the information entered, as of today. Not every lender accepts a down payment that is borrowed, and the line of credit payment counts in the debt service test, which can lower the mortgage you qualify for. You may wish to confirm both with a lender or broker. The line of credit rate is usually variable. Payments above the required amount assume your mortgage allows that much prepayment, and the comparison stops at the checkpoint because the rates are set again at renewal. Land transfer tax and closing costs are the same either way and are left out. For informational purposes only.
Estimate. Hover or tap the chart for any month, or use the arrow keys.
How the estimate works
Two ways to buy
A: your cash goes down, the mortgage is insured, and the premium is added to it. B: a line of credit tops your cash up to 20% of the price, so the mortgage is 80% of the price and needs no insurance. Everything else about the purchase is the same.
The same monthly budget
Both paths get the same amount each month. In B, the mortgage payment comes first, then the line of credit takes the rest, and once it is repaid the extra goes to the mortgage. In A, anything above the required payment goes to the mortgage. Mortgage interest compounds twice a year; the line of credit charges its rate divided by 12.
What counts as cost
For A, the premium, the 8% Ontario sales tax on it and the mortgage interest. For B, the mortgage interest and the line of credit interest. The calculator also shows what you would still owe at the checkpoint, because a path can cost less and still leave more to repay.
What it leaves out
Whether a lender accepts a borrowed down payment, and how the line of credit payment affects what you qualify for. Both are worth confirming before relying on the result. Land transfer tax and closing costs are the same either way.
Common questions
- Why would anyone borrow to reach a 20% down payment?
- With less than 20% down, the mortgage has to be insured, and the premium is 2.8% to 4% of the loan, added to the mortgage, with 8% Ontario sales tax on it paid in cash at closing. On a $600,000 home with 10% down that is a premium of about $16,700 plus about $1,300 in tax. Borrowing the gap to 20% avoids the premium, but the borrowed amount carries its own interest, usually at a higher rate than the mortgage. Which costs less depends on the rates and on how quickly the borrowed part is repaid.
- Can I borrow my down payment?
- It depends on the lender and the type of mortgage. Many lenders ask where the down payment came from and want it to be your own savings, a gift or the proceeds of a sale. Some accept a borrowed down payment, often with a stronger credit and income profile. You may wish to confirm with a lender or broker before counting on it.
- Does the line of credit affect how much I qualify for?
- Yes. Lenders count a payment on the line of credit in your total debt service ratio, the share of income going to housing and all debts. A larger line of credit balance can lower the mortgage you qualify for, even when the overall cost looks lower.
- Why is the uninsured mortgage rate usually higher?
- An insured mortgage is backed by the insurer if the borrower doesn't pay, so the lender's risk is lower and it can offer a lower rate. With 20% or more down the lender carries that risk itself, and the rate is often a little higher. The calculator starts the uninsured rate 0.40% above the insured one; you can change it to match a quote.
- Why does the comparison stop at a checkpoint?
- At the end of each term the mortgage renews at whatever rates are on offer then, and a line of credit rate can change at any time. Comparing at the end of the first term keeps the estimate to the period where the mortgage rate is known. The year-by-year table shows how the gap between the two changes along the way.
Related calculators
- What would the payment be on this home?The payment on a purchase, with the minimum down payment and any mortgage insurance premium worked in.
- How much house can we afford?Applies the stress test, debt limits and down payment rules to your income and savings, and estimates the price they could support.
- How much land transfer tax will I pay in Ontario?Ontario and Toronto land transfer tax, with first-time buyer refunds.
Want to talk it through? A licensed broker can tell you which lenders accept a borrowed down payment and how the line of credit would affect what you qualify for. Book a free conversation. It is entirely optional.
Rules last reviewed 5 October 2026. An estimate, not a quote or a pre-approval.