Ask us about zero down payment mortgages!

Zero Down Payment Mortgage

If you don’t have money saved for a down payment on a mortgage in Edmonton, we have mortgage solutions for you. Call the team at The First Mortgage today and ask us about how we can get you approved for a zero down payment mortgage today!

One of the most frequently asked questions we get is “Can I still purchase a home in Canada with zero down payment?”. If this is a question you are looking for the answer to, the answer is YES! You don’t have to save your pennies for months if not years just so you can own your own home and start building equity rather than paying rent. As you may have noticed, we specialize in working with first time home buyers and part of this is helping find solutions for buyers who don’t have a huge down payment to put down on a home.

Let’s get started by going over the current prerequisites or guidelines down payment options:

  • Home Prices up to $500k = Minimum down payment of 5% is needed for bank loans. No matter what, you will require this to buy a home but we have solutions if you don’t have the initial $25k.
  • Home Prices Over $501k = Minimum down payment of 5% of the first $500k + 10% of the balance. To give you an example, let’s say you want to buy a home with a price tag of $700k. You would need $25k to cover 5% of the first $500k + $20k to cover 10% of the next $200k.
  • Home Prices Over $1,000,000: Minimum down payment of 20%

Now lets go over your options if you don’t have money for a down payment or only have part of the down payment.

CMHC Flex Down Mortgages (No Down Payment)

Our team at The First Mortgage has the ability to offer home buyers even more flexibility. With CMHC Flex Down, home buyers looking for zero down payment mortgages now have the opportunity to borrow down payment funds from Non-Traditional Sources. Apply for a zero down mortgage today!

CMHC Flex Down Features

The CMHC Flex Down program makes it available for purchase transaction with a loan-to-value ratio of 90%-95% and are applicable towards the purchase of 1-2 unit residential properties. A key feature of the CMHC Flex Down program is that it gives home buyers access to a brand new range of loan sources who can supply down payments while offering flexible financing options. This program also offers extra incentive to home buyers interested in purchasing energy-efficient homes.

This has proven to be a great way to provide Canadians with earlier access to home ownership and because this offer is done through the CMHC, home buyers are getting access to very competitive interest rates.

One Minute CMHC Flex Down Application

Borrow a Down Payment

How is your credit rating? Have you had consistent income over the past couple years? If you answered both of these questions with a yes, we know lenders who will allow you to borrow your down payment and let you pay it back with manageable installments over the course of your first mortgage. The best part is that as long as you have good credit and stable income, borrowing your down payment, you can still get the best mortgage rates! There are many options for you to consider when trying borrow your down payment including:

  • credit line
  • personal loans
  • family loans
  • gifted down payment

Gifted Mortgage Down Payments

A gifted down payment is essentially a loan from a family member that doesn’t need to be paid back. It could be from a parent, sibling, cousin, grand-parent or any other direct family member. All you need is a letter from said family member stating that the funds do not need to be repaid along with a picture or screen shot or supporting documents showing the gifted funds being transferred into your account. The best time to do this is two to three weeks from your closing date.

Note: If you can find a loan or a gift to cover the down payment of your mortgage you will still need 1% to 1.5% of your purchase price for closing costs. If you don’t have it, there are solutions for that too!

Pay Closing Costs with a Cash Back Mortgage!

Ranging from 1% to 5%, a cash back mortgage is when a lender provides the borrower with a percentage of the mortgage amount. Interest rates on this cash back are a bit higher than the lowest mortgage rates we can find but it’s definitely cheaper than the rates you will find on a credit line or credit card. It also gives you the freedom to pay closing costs, make minor repairs or renovations, pay for moving costs or even go on a vacation. Fixing a leaky roof or other problem related to your new home with the cash back from your mortgage could save you big bucks in the long run.

Did you know you can get paid for sweat equity on your own home?

It’s true! By adding value to your new home through home improvements, you can actually get paid for your sweat equity and the more sweat you put in, the more equity can be put towards your down payment.

Have you ever heard of Habitat for Humanity?

Habitat for Humanity is a global organization that works on somewhat of a “pay it forward” basis where individuals or families who are unable to purchase a home can put up volunteer hours or hours of sweat equity that will in turn go towards the construction of their own future home or the home of another Habitat for Humanity family.

The big catch with this program is that any work done must be up to code, one must be a licensed trades person and the work must be completed before closing so it generally only works with new homes. If you are an electrician, plumber, framer, carpenter or work in heat pump installation etc., this could be a great option for you.

There are only a few lenders who will consider this as down payment so be sure to get in contact with us so we can be sure you are eligible. You can also combine sweat equity with a traditional down payment.

Use RRSP’s for Down Payment

The Canada Home Buyers Plan gives potential home owners the opportunity to use up to $25k of RRSP money per buyer towards buying a home without having to pay taxes on said withdrawal. This $25k doesn’t have to be used towards a mortgage and can be used for closing costs, debt payment, moving expenses or renovations.

Prerequisites for qualifying for the Canada Home Buyers Plan:

  • If you or your spouse have not owned a residence in the past four years
  • If you are building or purchasing a home for a disabled person who is related to you

Government Grants

As part of the Canada Affordable Housing Program, occasionally the Federal Government, Provincial Government or Municipal Government offers down payment assistance in the form of grants and or interest free loans. Unfortunately the qualifying criteria, prerequisites and qualifying criteria required for approval is part of a rigorous process but it’s worth while if you can get it.

Canada Affordable Housing Program Grant Guidelines

  • The home being purchased must meet specific guidelines that include a limit on the maximum purchase price and style of home. This means it must be equal to or below the average price for homes in the area and it’s affordability must be equal to or lower than average.
  • This program is available to those who are currently renting only
  • Buyers must have an overall income equal or lower than 50% of the population
  • Down payment provided through the Canada Affordable Housing Program must not exceed 5% of the overall purchase price.
  • Anyone who sells their home within the first 10 years of ownership are required to repay the amount of the grant along with a percentage of any capital gains.

Availability and prerequisites change frequently so it’s a good idea to run an online search using the following keywords:

  • Down Payment Assistance Grants in (insert your town name)
  • Municipal Grants in (insert your town name)

If you think you would qualify for any or all of these options, give us a call and we’ll get you started on the process getting you approved for a zero down mortgage!