Can I Buy A House With No Money Down?


Clearing Up the Mixed Messages
I can see why people call asking me this question all the time.  Everyone remembers hearing news reports about the rules changing from 0% down payment to 5% down payment.  But now you are hearing advertisements saying you can buy without a down payment.  Hopefully this will help clear up the confusion. 
5% Down Payment Required
There is no such thing as a zero down payment mortgage in Canada.  On October 15, 2008, the zero down payment mortgage option was eliminated requiring all purchases to have at least 5% down payment.   
Flex Down Option – Borrowed Down Payment
Flexible Down Payment, often referred to as Flex Down or Borrowed Down, is a borrowed down payment option.  It is carried by limited lenders but it does still exist, for now.  This allows you to purchase by borrowing your down payment from a personal line of credit or using a personal loan.  There are some important details about this product:
Additional financing costs - Instead of a 3.15% insurer premium you will pay a 3.35% premium.  You will still have access to competitive rates, but because lender options are so limited it won’t always be as low as the rate for a saved down payment.
Limits your maximum purchase price - The payments to the line of credit or personal loan must be included in your qualification.  This increases your monthly debts which will decrease your maximum purchasing budget.  This will have a bigger impact on someone with more debts.
Higher credit score requirement - You must have a credit score of 650 or higher so this is only an option for those with stronger credit.
You still need some money up front - You still need to prove to the lender that you can cover your closing costs.  This is calculated at 1.5% of the purchase price.
This option is not for everyone -  There are exclusions on who can use this, including New to Canada clients and those using stated income to qualify.  It is important to have your situation reviewed to see if you would qualify.
Is This a Fit For You?
It is a great option for someone who has low debt, strong credit, and is purchasing well below their maximum purchase price.  Even still, it is important to go into it with a plan of how to pay off that additional debt payment while making the required mortgage payments.  For example, we’ve seen a client coming out of a divorce who simply hasn’t had the time to build up a down payment but had strong income and credit.  They could easily pay the loan off within a year. 


Is Flex Down an option for you?  I’m happy to review your situation so you have a financing plan before you go out house hunting. 
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5 Year Variable - Prime -.55* (2.40%) insured only
5 Year Fixed - 2.99%*
4 Year Fixed - 2.77%*
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*rates subject to change and OAC, lender restrictions apply



 

Welcome to the August issue of the News & Rate Advisor.
Current Discount Mortgage Rates Aug 2014
Variable Rate 2.45%
1 Year 2.89%
2 Year 2.59%
3 Year 2.69%
4 Year 2.77%
5 Year 2.99%
7 Year 3.79%
10 Year 4.49%
Prime Rate 3.00%


Canadian Qualifying Rate Aug 2014
Rate 4.79%
Source: Bank of Canada



Current Posted Mortgage Rates Aug 2014 Aug 2013 Aug 2012
1 Year 3.14% 3.14% 3.10%
3 Year 3.75% 3.95% 4.05%
5 Year 4.79% 5.34% 5.24%
Source: Bank of Canada



Current Bank of Canada Rate & Prime Rates Aug 2014 Aug 2013 Aug 2012
Bank Rate 1.25% 1.25% 1.25%
Prime Rate 3.00% 3.00% 3.00%
Source: Bank of Canada



Average House Prices by City Jun 2014 Jun 2013 Jun 2012
Yellowknife $465,219 $437,024 $398,789
Vancouver $796,714 $762,861 $701,141
Victoria $496,225 $507,940 $486,611
Edmonton $371,839 $353,360 $340,391
Calgary $466,994 $442,529 $422,139
Saskatoon $345,773 $335,046 $287,355
Regina $307,830 $311,471 $312,241
Toronto $568,953 $531,374 $508,622
Hamilton-Burlington $409,195 $390,572 $363,162
Ottawa-Carleton $365,366 $359,372 $354,690
Quebec City $267,564 $272,008 $263,740
Montreal $332,462 $329,512 $336,054
Fredericton $192,433 $177,551 $189,732
Saint John $161,224 $189,614 $163,468
Halifax-Dartmouth $277,838 $272,477 $272,495
Winnipeg $280,112 $274,121 $257,095
Source: CREA - Most Recent Month Reported



Average House Prices by Province Jun 2014 Jun 2013 Jun 2012
National $413,215 $386,585 $369,339
Yukon $291,994 $345,795 $321,621
Northwest Territories $465,619 $437,024 $398,789
British Columbia $556,977 $533,219 $503,232
Alberta $407,166 $385,959 $369,895
Saskatchewan $301,741 $291,981 $267,534
Manitoba $274,173 $266,903 $250,698
Ontario $436,620 $407,228 $369,339
Quebec $274,069 $270,221 $277,181
New Brunswick $166,208 $167,878 $170,619
Prince Edward Island $150,886 $142,002 $164,251
Nova Scotia $204,071 $224,839 $224,765
Newfoundland $294,158 $289,828 $265,051
Source: CREA - Most Recent Month Reported

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Elizabeth Cwik

Elizabeth Cwik

REALTORĀ®
CENTURY 21 Platinum Realty
Contact Me