What it is:?
Can you still get a Mortgage with No Down Payment? The answer is yes, however there are different terms and conditions that you will have to meet in order to qualify for the mortgage. The No Down Payment mortgage is a High Ratio mortgage that is insured by Canadian Mortgage Housing Company (CMHC) or Genworth Financial. The insurance premium is 3.60% which is added to the mortgage and amortized over 25 years. In order to qualify for this type of mortgage, you have to be able to show that you can afford your mortgage payments and any other costs associated with owning a home or condo such as property taxes, condo fees and utilities. You will need to qualify the same way as other mortgages keeping your Gross Debt Ratio (GDS) and Total Debt Ratio (TDS) within the 32% GDS and 42% TDS.
Why it is important:
It is important that our lending institutions in Canada see a need for products such as this. This product can be a risky option for the lenders and borrowers but it is a good product for borrowers who need a little assistance to achieve home ownership. There are a few lenders who provide a mortgage with No Down Payment.
Why you specialize in it:
Not everyone ﬁts into the proverbial “bankers box” there are good clients out there with excellent credit, job security, and good income levels but with not enough cash to fully qualify for a mortgage with 5% down payment. You can examine if there are funds available to you through a personal loan or unsecured line of credit. If you can debt service the payment on the borrowed down payment as well as the new mortgage your one step closer to home ownership. Talking to a mortgage professional to see if this makes sense for you is very worthwhile.
If you’re in the stages of saving up and preparing for home ownership, you should meet with me so we can get your pre qualiﬁcation completed and discuss your different ﬁnancing options.
You might have heard that the opportunity to buy your ﬁrst home with no down payment continues to be an option for Canadians. You might also be wondering if this is a good ﬁnancial strategy for you. Let me outline all of the details that you should be aware of with each option.
You will need clean credit with a beacon score above 680. If you would like to check your own credit you can do that at Equifax.ca or contact me and I can check the credit free of cost. I will also provide a good discussion on how to improve your credit and if there are any areas of weakness.
Your employment history will need to be strong showing the lender that you have the track record to maintain a job in good standing and support the mortgage application with proof of your salary or wage being consistent. You can earn income in a number of different ways, such as an hourly wage or salary however you will have to prove that income by showing the lender your past two years Notice of Assessments, T1 Generals and T4’s.
If you have some savings and a few assets paid down you will be able to support your application with a good Net Worth. The lender will want to ensure that you have other areas of savings such as a pension, RSP, TFSA or GIC’s.
This product might be the right ﬁnancial strategy to get you started owning your own home and building equity for your family.