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NO DOWN PAYMENT? YES You Can

Free Down Payment Mortgage Program

Zero Down Payment Mortgage – Gone.. but there is something else.

If you’re wondering why government backed zero down mortgages have disappeared in Canada, it is because of the mortgage/foreclosure crisis in the States. These products, originally offered by Alternative Lenders, quickly disappeared when several, if not most, of the alternative lenders ran back down south of the border and took their products with them.  When this happened, we were not surprised to see the end of zero down and 40 year amortization’s as they were offered by our government insurer, CMHC and U.S. based insurer, Genworth.  This was done quickly to prevent the same crisis in Canada.  There are many opinions based on this information and I am not here to voice mine.  I am simply here to facilitate information and make sure all of my clients have access to all of the products that are offered.  I would suggest consulting your financial planner on the benefits or negatives to utilizing this type of product if you are at all concerned with what the future of the economy in Canada might have in store and whether or not you would be negatively affected if you chose to enter into one of these products.

Whether you are a first time buyer who does not have a sufficient down payment or you want to use your own funds for other purposes, consider these options.

5% FREE Down Payment
This is NOT a ZERO DOWN Mortgage, instead the lender actually GIVES you 5% down, resulting in a mortgage that starts out at 95% LTV + applicable insurance premiums.

The terms of this mortgage are the following:

• Purchases Only
• Owner Occupied, single family unit and duplexes only
• New or existing properties (no builds)
• Minimum Credit score – 680
• Up to a 35 year Amortization
• Must show 1.5% in closing costs available – lender needs to confirm you have additional funds available for legal fees, moving, unforeseen events, etc.
• Five year fixed rates, based on POSTED rates, not discounted
• 5% cash back based on the entire purchase price, will be advanced at closing to use for down payment
• Deposit accompanied with an offer to purchase is still required, however, you will get it back, minus legal fees, from your lawyer after closing

5% Borrowed Down Payment “Flex Down” Mortgage – this is another alternative that you can consider

Offered through CMHC:

The terms of this mortgage are the following:

• Purchases Only
• Minimum Credit Score – 650
• Up to 35 year Amortization
• Must show 1.5% in closing costs available – lender needs to confirm you have additional funds available for legal fees, moving, unforeseen events, etc.

Advantages to Borrowed Down: Unlike the previous zero down product offered by CMHC, your down payment will not be amortized with the mortgage, potentially saving money in interest charges

• Fixed and variable rates are available
  Borrowed down payment can come from any source – credit cards, loans, unsecured lines of credit; must be able to qualify with debt service ratios including this borrowed down payment

*CMHC Premium is 2.9% – add an additional .20 per 5 year increase in amortization

For example:

Based on a $200,000 mortgage – CMHC Premium is $5,800 rolled in based on a 25 year amortization. If you want to increase your amortization to the maximum 35 year amortization, it would be calculated like this:

$200,000 x 2.9% + .4%= 3.30% $6,600 premium rolled in