YOU CAN BUY A HOUSE WITH NO MONEY DOWN

If you have a good job and want to buy a first home, but don’t have a down payment, can it be done? The answer is maybe and depends on how you answer these questions.

How's you credit score? In order to qualify for a mortgage you must have a good credit rating. Try and reduce or eliminate all outstanding credit card debt first. Cancel credit cards that you are not using.

Do not change jobs just before applying for a mortgage. The lender will want to see that you have a stable employment history. You can go to Equifax.ca to obtain a free copy of your credit score. If any information in your credit file is incorrect, take the time to get it fixed before applying for any mortgage loan.

Do you qualify for an insured mortgage? With an insured mortgage, you are able to finance up to 95 per cent of the purchase price, either through CMHC or a private mortgage insurer. You will need to have at least the remaining 5 per cent down payment, as well as approximately an additional 1.5 per cent to cover the land transfer tax, legal, moving and other closing fees.

You may also want to set some money aside to do some work on your new home before you move in. To obtain the insured mortgage, you will have to demonstrate that you have enough monthly household income to pay your mortgage as well as your household expenses. It is a good idea to try and get pre approval for a mortgage, so you know before looking how much you can afford, based on the down payment that you have.

Is it possible to buy a house with no down payment? Some lenders offer qualified buyers the entire down payment on the day of closing, if the buyer has good credit, stable employment and qualifies for the lender’s closed-mortgage rate over 5 years. This can allow you to buy a home worth up to $400,000 in most cases.

The disadvantages with these mortgages are that if you want to discharge them early, you will have to pay back a pro-rated portion of the money received. And you will probably be paying 3 per cent more interest on a monthly basis than you would if you were using a variable rate mortgage, which is popular today for most home buyers.

This extra interest will amount to more than the imputed value of the down payment over a five-year period, yet it will be offset by the fact that you get to close your purchase now, with a down payment that you currently don’t have. Other lenders offer similar “cash back” mortgages, which may cover your 1.5 per cent closing costs or more, on similar terms and conditions.

If you are contemplating a home with a basement apartment to help carry your expenses, be careful to make sure that the unit has legal zoning and complies with the local Fire Code. In addition, make sure that you notify your insurance company about this.

Finally, always have a professional home inspection done. You do not want to find, after closing, that the house requires repairs that you can’t afford.

Even if you have a low down payment, by being properly prepared, your dream of home ownership can come true in 2017.

Get your Mortgage pre-approval in 1 hour. Click below: http://www.margmortgages.ca/LookingForYourFirstHome