About Down Payments
The Federal Government has recently become involved with the rules regarding a down payment for a house purchase. Most notably, it has been read in the news that zero down payment mortgages are no longer allowed.
Zero Down Payment
In some cases, it is still possible to buy a house without a down payment. Some banks will tell you it is not possible any more, but MortgageFlex has a lender that will allow this still.
The mortgage is still insured through CMHC.
Here is how it works. The program is actually done through a program called a "5% cash back program". With this program, the lender will actually give you 5% of the amount that you borrow, and that money is used as a down payment.
So let's assume that you you are buying a house for $350,000. A normal 5% down payment would be $17,500. With our 5% cash back program, the lender gives you the $17,500, and your mortgage would be $332,500.
But, you have to realize that banks don't just give down payments away for nothing. Over the next 5 years your interest rate will be about 1.5% higher than it normally would be. That is how the bank gets their 5% back.
This program is only available to people with a credit score of 680 or higher. Other conditions apply too.
Gifted Down Payment
Most lenders allow for a down payment to be gifted from a family member. If you are receiving a down payment from a family member, then the lender will need to see your bank account which shows that down payment money going into it. In addition, they will want to see a gift letter form filled out by the family member giving the money. No other verification is needed.
Down Payment From Own Resources
If you are paying for the down payment from your own resources, then the lender will need to see where that money came from. Normally, that means seeing 3 months of your last bank statements that show where that money has been for the last 3 months.
If you have recently received that money, and it hasn't been in your account for 3 months, then they will be asking questions to find out where the money came from. We can help you understand this further if you have what you feel is a unique situation.
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