Triston Rans - Calgary Mortgage Associate

No Down Payment Mortgages

When buying your first home it can be quite the feat to save up for a down payment. Luckily, as a first time home buyer you have a few options so you can get your house with less down.

Typical Down Payments

Typically, a down payment for a home purchase is 20% of the purchase price. In Calgary where the average home price is hovering around $500,000, the average down payment would respectively be $100,000. If you are paying rent or student loans, saving up $100,000 might not only be impossible but it can be largely impractical. Taking advantage of a Zero Down Payment mortgage plan can help you put some of that down payment money toward student loans or other debts that are accumulating interest at a much higher rate than your mortgage.

Home Buyers Plan

As a first time buyer you have opportunities to free up your equity that are not available to seasoned buyers. One of those options is the Home Buyers Plan. The Home Buyers Plan allows you to withdraw up to $20,000 from your RRSPs to put toward purchasing your first home. If you plan to take advantage of the Home Buyers Plan, you will need to fill out a T1036 form for Revenue Canada and should make sure that you have notified your financial adviser. Receipt of your funds may take some time so it is important that you request your funds early on in your home buying process.

“Gifted” Down Payments

First time home purchasers are also able to receive a portion of their down payment as a “gift”. If you are receiving monetary help for your down payment you will be required to supply proof in the form of a letter that states who is giving you the money and what it will be used for.

100% Mortgage Financing

No RRSPs? No lump sums of cash coming from friends and family? No Problem!

New home owners can take advantage of 100% financing for their new home purchase. If you have no down payment you can still buy your first home with some good credit, employment for 6 months or more at your job and if you have been in the same line of work for 2 years. When exercising a 80-100% mortgage financing option, the Canada Mortgage & Housing Corporation (CMHC)/ Genworth high ratio mortgage insurance is required. While you won’t need anything for your down payment, you will need some monies available for a deposit that is given to the seller at the time an offer to purchase is written. As well, you are required to have 1.5% of the purchase price saved to pay for the closing costs. (legal fees, etc.). The deposit acts as a credit to the 1.5% requirement, so if your deposit is 2% of the purchase price, then you would already have the closing costs covered. Any monies ‘left-over’ from the deposit, would be refunded from your lawyer a few weeks after you have taken possession of your new home.

For more information on which first time home buyer financing options are right for you, contact Triston Rans today.

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