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Can you buy a house without a down payment in Canada?

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April 9, 2018 - Karl Yeh

Wondering if you can buy a house with zero money down? What are your other options? In this episode, we discuss if you can purchase a home with no down payment and what alternatives you have to help you buy. 

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Karl Yeh:

Hi everyone and welcome to another edition of Homebuyer's School.

Today I'm joined by Troy Champ, a Mortgage Advisor with Mortgage Tree, and today, the question we're going to answer is;

Can I buy a house with zero down payment?

Troy Champ:    

At one time, you could buy a home in Canada at zero down.

That program's been removed.

The alternative to that program now is what's called a flex down mortgage.

What that means is that you're able to use a line of credit or credit card or personal loan and use that towards your down payment. It's a specialized program.

Not all banks offer it. You have to have a high Beacon score, credit score.

Karl Yeh:           Okay.

Troy Champ:     As one requirement.

You also have to have a high enough income in order to support the new mortgage payments as well as that loan payment.

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Karl Yeh:          

If you're a first time homebuyer and let's say, you're younger so you obviously, your income isn't maybe that high, could you use another source, let's say your parents?

Troy Champ:    

Absolutely. You could use a gift from a family member.

That's not a problem at all.

They just want to verify a gift letter's signed by a family member to show the source of these funds. Really important to make sure these funds weren't laundered, they're not illegal funds. Sale from drug activity, things like that.

Karl Yeh:           Okay.

Troy Champ:     The bank just needs to have a comfort level with that.

Karl Yeh:           Perfect. Anything else to add?

Troy Champ:    

The down payment just goes towards your equity in the home.

When you've given the bank the down payment, that's your equity in the home and then your mortgage amount is calculated from the purchase price less your down payment.

Karl Yeh:           Perfect. Thank you very much Troy.

Troy Champ:     You're welcome.

Karl Yeh:           Thank you very much everyone, for joining us and we'll catch you next time.


Recommended watch:

So of our other videos that you may be interested in watching related to this topic are:

How much do I need for a down payment when buying a house?

How does a down payment affect your mortgage payments?

How do I get pre-approved for a mortgage in Canada?


Your turn:

Let us know if you have additional down payment or home buying questions that we can answer by submitting them in the comments section below. 

Homebuyer's School publishes new content weekly so subscribe or check back regularly for the latest information, strategies and tips from homebuying experts. 

About Troy Champ: 

Troy is one of those uniquely capable mortgage experts who has refined his craft over 17 years of experience with two of Canada’s major financial institutions and then one of the largest mortgage brokerage firms in Western Canada. He is amongst a rare group of professionals who have funded over $500 million in mortgages over his career and received many top level awards for excellence.

A hallmark of Troy’s service pledge is unparalleled availability. While many will say they provide great service, Troy proves it day in day out without question. His clients are never left waiting for answers to their enquiries. Quite simply, his clients are thrilled to work with someone who says what they do and does what they say.

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