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Borrowing Your Down Payment

So as you may have heard, the zero down mortgage in Canada has been eliminated as an offering to first time buyers. This is unfortunate as the product served a real purpose for those who can afford a home of their own but just can't seem to save up the 5% down payment (or don't have family that can gift them the money). Although we don't have an in-house solution to the problem, there are still ways of buying a home with none of your own money; the answer is to borrow the money in the form of a loan or line of credit. The idea is very similar to the 5% cash back mortgage (explained below) which we used to use for our zero down mortgage, but the good news is you don't have to settle for the posted bank mortgage rate; you get a fully discounted rate. PLEASE NOTE: We do not have options for the borrowed down payment, you must source this on your own.

Obviously getting a fully unsecured loan (up to $15,000 is allowed) is not easy, it depends on your credit and overall stability. Another option is an RRSP loan, these can be much easier to get and after 90 days you simply use these funds for your down payment. The payment by going this route will be very similar to the 5% cash back would have been and it allows you to get into the market now rather than waiting till you can save the full 5%.

5% Cash Back Mortgage

The 5% cash back mortgage is still available in Canada however we cannot use it for down payment any longer. The 5% cash that you receive upon closing for this product can be used for anything else however, furniture, paying down debts, renovations, you name it! All you need to qualify is a full time job, clean credit and of course your own down payment. We also have cash back mortgages with less cash and lower mortgage rates, talk to one of our Canada mortgage brokers to personalize a cash back loan for your situation.

Answers to your most common questions:

     1) Do you require clean credit for the borrowed down payment mortgage in Canada?

Yes you do, you need a minimum 650 credit score (which is considered average), and you must have a clean credit history with no recent missed payments.

     2) My bank says you cannot use the 5% cash back for your down payment, is this true?

It is now, however there are still lenders who subscribe to CMHC's 'non traditional down payment' program, and this includes borrowing your down payment.

     3) Do I need any money to purchase a home with a borrowed down payment mortgage?

Yes, you need to have money for your closing costs (1.5% is what CMHC wants you to have).

     4) I have had a bankruptcy that is still on my credit bureau, but my credit is good now, can I qualify for this product?

No, bankruptcies are not allowed for those wanting to borrow their down payment.

     5) What is the process to apply for a mortgage such as this?

It is the same as applying for any mortgage or credit application.


Buying With No Money Down

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