One dollar under 10% down costs an Ottawa buyer $5,886

The tier line that costs more than the house hunt

Most buyers know the insured mortgage premium has tiers. Fewer have run the dollars at an Ottawa price, and the dollars are uglier than the percentages suggest. Put 10% down on a $726,700 home and the premium is 3.10% of the loan. Put 10% down minus one dollar and it is 4.00% of the loan. That single dollar costs $5,886.

I wrote about closing costs line by line earlier this year and listed the tiers. This post puts the tiers on actual Ottawa prices, because a percentage on a loan this size is a different animal than it looks on a calculator.

The inputs

The price is OREB's August 2026 single-family benchmark, $726,700. It is a benchmark, not a sale price, so treat it as a clean round example and not a quote on any house. Townhouse is $547,300 and apartment is $392,900 from the same report.

The premium table comes from CMHC's own cost page. It is charged on the total loan: up to 65% loan to value is 0.60%, 65.01% to 75% is 1.70%, 75.01% to 80% is 2.40%, 80.01% to 85% is 2.80%, 85.01% to 90% is 3.10%, and 90.01% to 95% is 4.00%. CMHC also notes that premiums in Ontario are subject to provincial sales tax, 8% here, and that the tax cannot be added to the loan. You pay it in cash on closing day.

Minimum down payment under the federal rules is 5% of the first $500,000 and 10% of the price between $500,000 and $1.5 million. Insured buyers can now go to a 30 year amortization if they are first-time buyers or buying a new build, and the insured price cap rose from $1 million to $1.5 million in December 2024, per the Department of Finance.

What the minimum down payment looks like in Ottawa

Single-family at $726,700: minimum down is $25,000 plus 10% of the $226,700 above $500,000, which is $47,670, or 6.56%. Loan is $679,030, loan to value 93.44%, so the 4.00% tier applies. Premium: $679,030 times 0.04 is $27,161. PST on that is $2,173, cash at closing.

Townhouse at $547,300: minimum down is $25,000 plus $4,730, or $29,730. Loan $517,570, premium at 4.00% is $20,703, PST $1,656.

Apartment at $392,900: 5% down is $19,645. Loan $373,255, premium $14,930, PST $1,194.

The premium rides on top of the mortgage, so you also pay interest on it for the life of the loan. The apartment buyer is adding almost $15,000 of insurance to a loan on a unit that cost under $400,000.

The cliff at 10%

Stay with the single-family example. Ten percent down is $72,670. That leaves a loan of $654,030, exactly 90.00% of the price, which sits in the 3.10% tier. Premium: $654,030 times 0.031 is $20,275. PST is $1,622.

Now be one dollar short. Down payment $72,669, loan $654,031, loan to value just over 90%, so the 4.00% tier applies. Premium: $654,031 times 0.04 is $26,161. The difference is $26,161 minus $20,275, or $5,886 in premium, plus $471 more in PST. About $6,357 for one dollar.

The same cliff exists at 15% and at 20%, where insurance disappears completely. They are all sitting there, and the dollar amounts scale with the price.

Is the extra down payment worth it

Moving from the minimum ($47,670) to 10% ($72,670) takes $25,000 more cash. The premium falls from $27,161 to $20,275, a saving of $6,886. PST falls by $551. So each extra dollar of down payment removes roughly 27.5 cents of premium, or 29.7 cents with PST, on top of the interest you avoid on a smaller loan.

That is a high return for a one time cost, but I will not pretend it is simple. The $25,000 might be your emergency fund, your moving costs or your furniture. Someone else may need it for a better rate on a different structure. How you split cash between down payment, closing costs and a reserve is a question for your mortgage professional, because I sell houses. I do not give mortgage, tax or legal advice, and your situation may have details I cannot see.

Where I would spend my attention as an agent

Two things are worth watching. First, the 10% line moves with your search. A buyer with $70,000 saved who drifts from a $700,000 target to a $750,000 one has moved the 10% line from $70,000 to $75,000, and the savings did not move, so the premium tier did. Always price the purchase and the down payment together, not separately.

Second, the FHSA and Home Buyers' Plan stack is often a cheap way to cross a tier line, since that money is tax advantaged. Borrowed down payment money is treated differently: CMHC's table shows a higher 4.50% tier for a non-traditional down payment at 90.01% to 95% loan to value. Confirm the source of your funds with your lender before you write an offer, not after.

What I would do this week

Take your target price, subtract 5% of the first $500,000 and 10% of the rest, and see what the minimum is. Then compute 10%. If the gap between them is a number you can close, close it. If not, at least you know what the premium costs, and you can see what is on the market right now with real numbers behind your search.

If you want the premium and PST worked out for a specific price on your list, call me at 613-262-6545 or email fil@613realtor.ca. Ten minutes with a calculator open saves a conversation at the lawyer's office.