As of October 15, 2008, the government no longer allows insured mortgages with nothing down
The government has tightened up lending rules with the elimination of 0 Down Payment and a 40 year amortization on home purchases. Now, as it used to be, a CMHC Insured Mortgage requires a minimum down payment of 5%--a back to the future policy change.
Yet 0 Down purchases are still possible with the CMHC Flex-Down Plan
This offers buyers the opportunity to buy a home sooner by using a wider range of sources for their down payment. So if a buyer does not have the minimum 5% down from their own resources, they can, if they qualify, buy with the following non-traditional sources.
--Cash Back Incentive. Some lenders offer 5% cash back on mortgages, which can be used as one's down payment. A credit score of 600 or better is needed. Of course, the buyer would need to have closing costs set aside.
--Gift Letter. A gift letter from a parent, brother or sister continues to be acceptable. The gift letter must state that the money is not repayable.
--Borrowed Funds. This method can still be used, provided the Borrower's total debt including mortgage does not exceed 40% of income.
Advantages of CMHC Flex Down
- Helps Provide Earlier Access to Home ownership, with as little as 5% down.
- Permitting an optional range of sources for one's down payment, gives more people the option to buy a home and start building equity.
- Access to CMHC insured financing gives buyers the advantage of competitive interest rates which continue to remain low.
- The Flex-Down Plan is available coast-to-coast with no set maximum loan amount.
0 Down Through Secondary Lenders
Some secondary lenders will lend up to 85% of the purchase price and self insure the mortgage. They then can allow the buyer to arrange a second mortgage for the remaining 15%, provided the buyer qualifies. The CMHC Flex-Down Plan is by far the cheaper and better route to faster home ownership.
Our Centum Omni Mortgage Specialists can provide more details and a confidential review to a potential homebuyer.