Triston Rans - Calgary Mortgage Associate

Little to No Down Payment Mortgages

Can I Still Get a House Without a Large Down Payment?

I would like to buy my first home, but have had difficulties saving enough for a large down payment. Can I get financing with no money down?

Saving the traditional 25% down payment can be a huge obstacle for many new homebuyers, despite having great credit and steady income.

Mortgage lending institutions and mortgage insurers have realized that these potential homebuyers are valuable to the housing market and most are able to pay their monthly mortgage even if they can’t save enough for a downpayment. This is why mortgage lenders and mortgage insurers now offer qualified buyers mortgages with NO Money Down – and in some cases, homebuyers are receiving some of the most competitive interest rates in the market!

If you have good credit (minimum 2 year credit history required), your employment is steady (minimum 1 year in same line of work – schooling counts in this time frame), and your income is sufficient to support your mortgage payment, you could qualify for a no money down mortgage.

It is important to keep in mind that you will still need some funds available for the purchase transaction. When you find the house you want to make your home, you will need to submit an Offer to Purchase. A deposit must be included with an Offer to Purchase at the time it is presented to the seller. Intent to Purchase deposits typically range from $1000 – $5000, and your deposit can be borrowed from a family member, line of credit or even a credit card. The deposit monies will be paid back to you once the mortgage has closed, shortly after the possession date.

You will also need enough money to cover the ‘closing costs’ of buying a house. These include the real estate lawyer’s fee, registration, property tax and interest adjustments, and are all calculated by and given to your lawyer. Your deposit money is a ‘credit’ to your closing costs. However, if the purchase deposit is not enough to cover the closing costs, the remainder will need to be paid to your lawyer approximately two weeks prior to your possession date. The ‘rule of thumb’ of mortgage lenders is to have 1.5% of the purchase price at your disposal to cover the closing costs of purchasing your home. With today’s rising housing prices in Calgary, 0.5% – 1% is a more realistic range of what your closing costs actually may be. Don’t forget that moving carries several other expenses you should be prepared for such as getting utilities, phone and cable hooked up.

Although 100% financing is typically reserved for the ‘A’ credit population, there are lenders that will also allow those with slow or bruised credit to take advantage of this opportunity, but be prepared for higher interest rates. (You can obtain your credit report at www.equifax.ca).

Every mortgage situation is unique. Consult with a mortgage specialist who can personally navigate your credit report and help determine which type of financing program is best suited for your particular needs.

For further information regarding your personal mortgage needs, please contact Triston Rans, The Mortgage Group, at 403-571-8142 ext. 237 or email tristonrans@mortgagegroup.ca.

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