Zero money down: It really does exist!

How to get a mortgage with zero money down (yes, it really does exist)

We all know how hard it is to save money, especially when it’s a significant amount like down payment. A down payment on a home can be a large amount. But can you really get a mortgage with zero money down? The short answer is yes, but beware, it’s probably going to cost you.

Gifted down payments

The easiest and least expensive way is to have a helping hand from an immediate family member. An immediate family member we define as a brother, sister, mother or father. If they are willing to “gift” you the five per cent down payment for a house, then you are in luck. If this isn’t a possibility, let’s explore the next option.

Flex down – borrowing from yourself

If you have access to a line of credit or a credit card you can borrow the funds for a down payment. However, there are restrictions. You will need to ensure that borrowing these funds doesn’t increase your TDS (Total Debt Service) ratio to a level that surpasses qualifying standards. By using borrowed funds you will qualify for less than you would have using a traditional down payment. Also, you will need to have strong credit to apply for this product. Your credit score will need to be at least 680 to be considered for this product.

Nova Scotia Down Payment Assistance Program

This is a program launched by the Nova Scotian government in March 2017 to help first-time home buyers purchase a home. They provide you with the five per cent down payment as a 10 year interest-free loan; no payments required for the first year. This program does have a few restrictions so please go to the link below to see if you qualify. Some of these restrictions include: Household income must be below $75,000, you have never owned a home in the past, you have lived in Nova Scotia for the past 12 months, and more.

For more information visit Housing Nova Scotia.

Zero money down mortgage

The zero down mortgage is essentially a five per cent cash back mortgage. The lender will open a credit line for the five per cent down payment and after the mortgage closes you will get the five per cent back, to either pay out the credit line or use the funds how you wish.  You will need a credit score of at least 650 to qualify and the property must be located in an urban area on owned land; no mobile homes. Since the lender is giving you the down payment, the interest rate is higher as this is how you pay it back. Right now the interest rate for this product is set at 5.49 per cent for a five year term. However, after this five year term is complete you may go to any other lender in the marketplace for a more favorable rate.

To sum up

Unlike income or credit, a down payment is one of the easiest things to get around when it comes to applying for a mortgage. If you are unable to come up with a down payment it will not stop you from buying a home. Seek out the advice of a mortgage professional to see what solutions are available for your exact situation.

If you need any help or advice when it comes to mortgages, please don’t hesitate to contact me. I would be more than happy to help in any way that I can.