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Mortgage loans: FAQ

Here are the answers to your questions about mortgage loans.

What is the minimum down payment?

You need to put down at least 20% of the selling price to qualify for a mortgage. If you don’t have 20%, you can take out mortgage insurance and you’ll only need to put down 5%. In both cases you need to prove you have 1.5% of the selling price to cover start-up costs.

How can some builders have properties for sale without requiring a down payment?

Some builders do offer Canada Mortgage and Housing Corporation (CMHC)-approved programs that don’t require a down payment. However, the programs usually have very specific eligibility criteria and the down payment is often just delayed.

There are really only a few exceptions to the legal requirement to make a down payment when buying a property. The best way to lower your down payment is to insure your mortgage with CMHC or Genworth. Insurance can get your down payment to 5%.

As with traditional mortgage loan insurance, every down payment has to come from the buyer’s own resources or close relatives.

Debt-savvy buyers can put 5% down and access many resources, including a loan or lender incentives, as long as the down payment is from a source that is arm’s length to and not tied to the purchase or sale of the property. Contact your lender to see if they can offer you mortgage insurance and if you’re eligible. Continue reading