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Down Payment

Down payment

If you have less than 20% down payment, mortgage insurance is required as outlined below. Homeowners no longer need the minimum 5% down payment from their own funds to purchase a home.  You can now use borrowed funds for your 5% down or even have no down payment but keep in mind that there are higher credit criteria and your insurance premiums increase.

Down payment from your own resources (non borrowed):

You must supply verification satisfactory to the lender of accumulated savings from non-borrowed funds.  This may be in the form of:

• Copy of your bank statement or bankbook (including cover) showing a minimum three-month history.  Any large deposits during this time period must be explained and documented.

• Copy of RRSP statement, term deposits, CSBs, or other investments.

Down payment from a gift (non borrowed):

All or part of the minimum equity requirement (5% for down payment plus 1.5% for closing costs) may be provided by way of a financial gift, as long as all of the following conditions are met:

• The donor is an immediate relative of the borrower (recipient); and

• The Approved Lender has verified that the money is a genuine gift; and 

• The Approved Lender has verified that the funds are in the borrower’s (recipient’s) possession at least 15 days prior to closing.

The Approved Lender will verify the authenticity of the gift by obtaining a written confirmation, signed by the donor and the borrower (recipient), which will include the following points:

• The money is a genuine gift from the donor and does not ever have to be repaid;

• No part of the financial gift is being provided by any third party having any interest (direct or indirect) in the sale of the subject property.

Borrowed down payment:

Effective March 1, 2004, homebuyers can get their down payment from borrowed sources that include:

• Lender cash back incentives;

• Personal loans, lines of credit or credit cards;

• Unsubstantiated gifts.

When using a borrowed down payment, there are a higher credit criteria and also increased insurance premiums.

Down payment from the sale of an existing property:

You will be required to provide a copy of the unconditional Agreement of Purchase and Sale on your existing property.  This needs to be accompanied by a copy of a recent mortgage statement, showing the balance owing, on any mortgages presently registered against the property.  The difference between the sale price and the mortgages owing will substantiate the funds available for your down payment.

0% down payment mortgages:

• If you can afford mortgage payments but can’t seem to save for a down payment, there are numerous no down payment mortgage options, including the borrowed down payment program. 

No down payment mortgages can be ideal for:

• professionals and other high income earners just starting out who may have large student loans.

• also consider renters who often worry they won’t be able to find an affordable home by the time they’ve saved enough for a down payment.

The 100% financing mortgage can get you the home you want without having to save up for a down payment*. 

To be sure, 0% down payment mortgages are not for everyone.

The objective is not to take on a higher debt load than can be comfortably handled.

But for Canadians with good credit and steady incomes, these mortgages can definitely help to make the dream of home ownership a reality. 

Home Buyers Guide

Absolutely everything you need to know about buying a home in this 24 chapter guide!

To obtain your FREE copy of the full Home Buyers Guide fill out this form below

Before you make what is likely to be the biggest financial decision of your life, call us at 866-544-4001 or email Justin Christie or Keith Walper

To maximize the benefits to you, you may want to consider enlisting the services of a  Mortgage Intelligence agent.  We negotiate with major financial institutions, chartered banks, trust and insurance companies, Canada Mortgage and Housing Corporation, Genworth and others to bring our clients the most competitive mortgage rates and terms.  Mortgage Intelligence will usually earn a commission or fee from the lender* for all the work, advertising and promotion done on their behalf.  Our professional services are provided, in most cases, at no cost to you.  We are constantly updated on rate changes and new products being introduced in the market.  As our client, you can choose from the widest range of options, obtain the most competitive rate and best product suited to your specific needs.  An extensive network of financial institutions has enabled many of our clients to obtain savings of up to 1.40% below posted lender rates.

For more information or a free consultation - Please contact Justin Christie or Keith Walper at 519-238-HOME(4663) or toll free at 1-866-544-4001.

* Subject to certain guidelines

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