No Down Payment Saved
The Down Payment: as set by the federal government currently requires a minimum of 5% of the purchase price up to $500,000 and 10% on purchase price that is above $500,000 to a maximum of $1,000,000 (homes priced above $1.0M require a minimum of20% down payment)
There are a number of options for the down payment other than saving up the down payment. If your down payment is coming from your savings the lender will need to see a 90 day history of the down payment being saved in an account which belongs to you. Sometimes it makes sense to proceed with purchasing a home sooner than later and thus looking for other options for the down payment other than taking the time to save for it. If you are in a real estate market that is increasing in value every year, if interest rates are going to be increasing substantially before you save up your down payment or if you are paying high rent and the rent is going to be going up.
Gifted Down Payment: Part or all of the down payment can be gifted by a immediate family member. The person giving the gift my sign a gift letter which states that the funds are a gift and they do not expect it to be paid back. We must be able to show the lender that the gifted funds were transferred to the home buyer at least 15 days prior to the closing date.
Flex Down: is a program through the mortgage insurers that allows you to borrow the down payment. The program requires that you are able to cover the payments for the loan for the down payment and keep within the TDS debt ratio. We can work out this ratio for you as well as arrange for the loan. With the borrowed down payment the mortgage insures do charge a slightly higher mortgage insurance rate.
Home Buyer Plan/RSP: If you are a first time home buyer (or if you have not owned a house for 5 years or more) you can withdraw up to $25,000 from your RSP for the down payment on a home (a couple that qualifies can take out $50,000). This withdraw is tax free, but the money has to be put back into your RSP over a 15 year period. We can provide you all of the forms and advice on how the program works.
Don’t let the lack of a saved down payment hold you back from buying your own home and building equity as opposed to paying the landlords mortgage. Contact us and we can work with you to solve the down payment hurdle.