ZERO DOWN PAYMENT............. GIMMICK??? NOT AT ALL.... READ ON!!

I don’t know about you, but living in this day and age, when I see what looks to be too good to be true, I’m always looking for the catch.

However, it is possible to finance with no money down in a way that really is legitimate. And there are no catches.

Traditionally, one had to Purchase a home with a minimum of 5% down payment. The down payment had to either come from your own savings or as a gift from very close relative, one was not allowed to borrow the 5%

Because the insurance companies such as CMHC and Genworth realized that many people found ways to bypass this requirement, they decided to make the process much simpler and made rules and programs to cater for this contingency.

The no money down issue applies particularly to people that don’t want to wait until they have saved up enough money for a down payment. Or, perhaps there is a new family member on the way, and they need more accommodation right away. Perhaps you don’t have close relatives that are willing and able to gift you the necessary down payment or perhaps you just want to be independent and don’t want to have to ask for any favors.

There are a number of ways that one can get mortgage financing without any money down. All of them require sufficient QUALIFIED INCOME and GOOD CREDIT. The insurers do charge an additional premium for these programs, but the premiums are not significant or material

For those familiar with credit scoring, the minimum beacon score required to qualify is 650. For credit scores in excess of 680 it becomes easier to qualify.

The three most commonly used methods for financing with no money down are:

1) Borrowing 100% of the purchase price. This requires a beacon score of 680 and higher. Qualification ratios are more lenient

2) Borrowing the 5% down payment. This requires a beacon score of 650 and higher and the income qualification criteria are more stringent

3) Getting a 5% cashback, which can be used for the down payment. This option is very costly as there is no discount on the rate and is therefore not recommended in the normal course of events.

Methods 1 and 2 above are available with up to 40 year amortization, and at fully discounted rates.

You should start comparing the carrying costs of your own home in relation to rentals. Not forgetting that when you own your own home you get the benefits of capital appreciation as well as the reduction in principle with each months mortgage payment.

This is not really a do-it-yourself process and requires a fair amount of knowledge and expertise. For a knowledgeable mortgage broker however, it is a fairly simple process that can quickly provide the answer for you. You’re free to call me any time without any obligation to find out whether you qualify and what your monthly carrying costs might be

Merv Gabriel
www.Gabrielmortgages.ca