Need a Down Payment? Try a Flex Down Mortgage
It is getting more challenging for home buyers to come up with the down payment needed for their new home, especially in areas where prices are high. The minimum down payment is 5% (OAC); however, could be higher depending on your situation.
Some lenders offer a flex down payment program to help borrowers with a strong credit history. This option lets buyers get a mortgage without saving for the down payment themselves.
Here are a few ways you can access those funds:
- Secured line of credit. Use your existing home equity line of credit or apply for a new line of credit.
- Unsecured line of credit. Use your existing line of credit or apply for a new line of credit.
- Credit cards. Use your credit card to access funds or apply for a new credit card.
- Personal loan. Apply for a personal loan from your everyday bank to get the down payment funds.
- RRSP loan. You can borrow from your RRSP’s (but if you’re a first time homebuyer, you may be eligible for the HBP program, contact me for details on this).
- Gift from a family member. As long as this is a gift (and not a loan), and you have a letter indicating that you don’t have to pay this money back, then you can use it for your down payment.
What you need to know:
- Not every lender offers the flex down payment option.
- A borrowed down payment is a factor into your qualifying ratio. This is a debt payment, which means you must still meet the correct debt-to-income ratio.
- You’ll need an excellent credit score.
- Your mortgage default insurance (CMHC) premium may be higher.
- OAC, all standard underwriting guidelines apply.
The flex down program helps make it possible for you to start building equity in your own home without having to save for years.
Candace Perko
Mortgage Broker
Countryside Financial
www.countrysidefinancial.ca
