Owner-occupants should pay as much money on closing as possible. At no cost and with no obligation, buyers learn what they can afford to buy, based on what they can afford to borrow. A pre-approved mortgage also caps the interest rate for 60 to 90 days, depending on the lender. If rates rise over that period, the rate is guaranteed. A down payment under 25 per cent doesn't mean you can't buy a home.
Second mortgages involve set-up charges and higher interest rates.
Mortgage payment insurance isn't cheap, either. Between 80 per cent to 85 per cent, it's 2 per cent. For 85 per cent and 90 per cent, premiums run 2.5 per cent. And for people with only 5 per cent to 10 per cent down, the insurance premium leaps to 3.75 per cent. Lenders also must know if your income is large enough and sufficiently stable to carry the mortgage.