Buying a Home with No Down Payments is Possible in Some cases

May 9, 2017

Buying a Home With No Down Payment

Congratulations if you have decided to buy your first home in Mississauga, Ontario. However, if you are like a vast majority of other people living on rent, it is unlikely that you have sufficient money in your savings account to pay for the down payment of the property that you want to buy. If you are thinking how to buy a house without down payment, there are ways of buying a home with no money down. However, these ways are more an exception than a rule and also not prudent in many instances.

100% financing with cashback against high-interest rate

Till a few years ago, Canada Mortgage and Housing Corp allowed insured 100% financing. This was meant to help people desirous of buying a home but not having enough savings on account of high rents. But the government did away with this regulation that gave people a chance to buy homes without minimum down payment for a house. Lenders have now been barred from offering 5% cash back to the borrowers for down payment in exchange for a higher rate of interest.

Mortgage without down payment is feasible only in some exceptional cases

Well, it can be a risky proposition to try and buy a home without paying a down payment. The reason why it is not such a great idea is because of the fact that you might be in trouble if there is a loss of income or any other contingency that makes it difficult to pay your monthly obligations to the lender.

Can you buy a house without down payment?

Some lenders allow borrowers who are qualified to buy homes without paying any down payment. These borrowers have

  • Very good credit scores
  • Stable employment
  • Capacity to pay monthly installments and also bear monthly expenses
  • Capacity to bear loss of income through additional sources of income

If you fulfill all these conditions, you might be eligible for a mortgage without down payment. If you are an average individual not fulfilling all these criteria, it is better to stay away from 100% financing of your home.

There are other ways to get a mortgage without down payment. You can arrange the money required for down payment from other sources (no bank will give you money for this purpose). You can get a personal loan at a higher rate of interest for a short time period. This option is feasible only if your income is very high and you can repay both the mortgage loan as well as this personal loan comfortably. You can also borrow the money from a relative or friend.