First Time Homebuyer Loans

Homeownership has long been an integral part of the Canadian Dream. In fact, a recent survey showed that over 80% of millennial renters wanted to buy a home of their own – But most felt that they simply could not afford to.

However, what a lot of these folks may not realize is that there are many specialized programs available to first-time homebuyers that are designed specifically to help remove barriers to owning your first home.

This article will examine 8 such programs that aim to help you land a great mortgage and snag a place of your very own. The following programs are all provided through Private Mortgage Insurers (PMI).

1. Low Down Payment Mortgage

So here’s a little gem offered by the Private Mortgage Insurers. In Canada the required down payment for a home purchase is 20% unless it is Insured by one of the three Private Mortgage Insurers (CMHC, Genworth, Canada Guaranty). These Mortgage Insurers provide insurance against your Mortgage Default, meaning with this extra assurance, the loan can be offered with some particularly enticing features.

  1. 5% Down Payment on the first $500,000 of the purchase price and 10% on any amount above $500,000 but less than $1,000,000.
  2. Because the Mortgage is insured, you will also be offered more competitive rates than those you would find with a traditional loan.

This is one of the most widely used programs offered by the Private Mortgage Insurers. The insurance premium is payable by you the borrower and can be added to the Mortgage so you do not have to pay this out of pocket.

2. New to Canada Mortgage Loans

Ok, so this one is a great product for recent Immigrants to Canada with limited Credit History.

You have to have arrived in Canada within the past 60 months, have a valid Work Permit or have Landed Immigrant Status, be employed full time for at least 3 months and not  be on probation.

This program allows you to borrow up 90% to 95% of the purchase price depending on available documentation.

As above, the loan can be offered with some particularly enticing features.

  1. 5% Down Payment on the first $500,000 of the purchase price and 10% on any amount above $500,000 but less than $1,000,000.
  2. Because the Mortgage is insured, you will also be offered more competitive rates than those you would find with a traditional loan.

Types of documentation vary and will determine your maximum borrowing amount.

3. Purchase Plus Improvements

Probably one of the most under utilized programs offered by the Private Mortgage Insurers.

The major benefit with this program is the ability to add additional mortgage funds for the renovation of your home. In the age of HGTV and DIY Networks, everyone wants to purchase a home with all the bells and whistles. Unfortunately, these homes come at a premium on price and usually with competition from many buyers.

With this program, you can  buy a bit of a fixer upper and have the cost of renovations added to your mortgage, held in trust with your lawyer and paid to your trades upon completion of therenovation.

Here is an example:

You purchase a home for $400,000. the required down payment is 5% or $20,000. The home is in pretty good shape but the kitchen and a bathroom need to be updated ata cost of $40,000.

Under this program, the lender would assume a purchase price of $440,000. This would require a down payment of $22,000, a mere $2,000 more.

You can now benefit from finding a fixer upper at a discount, with little competition and you get to do renovations that suit your taste and needs.

As the old adage goes, buy the worst house on the best street.

Contact me for more information on this program.

4. Business For Self (Alt A)

Designed for the Small to Medium sized business owner and Commissioned sales employees who cannot provide traditional forms of income confirmation. The business must be operational for at least 2 years.

Typically, small business owners, for tax purposes, write off many expenses which lowers their overall taxable income. Great for saving on taxes, not great for mortgage qualification.

This program looks at alternate forms of proving income, higher than your Line 150 (Taxable Income) from CRA.

Because of the subjective nature of the program, applicants will be required to submit lots of documentation, have strong credit and assets and the mortgage amount available will be capped at $750,000.

5. Borrowed Down Payment Mortgage

Yes, Private Mortgage Insurers will allow for borrowed down payments from from sources that are arm’s length to the purchase transaction such as personal loans, lines of credit, credit cards, and gifts from non-immediate family members.

The borrowed funds will be considered a liability for qualification purposed and calculated into your debt-to-income ratios.

Not available for anyone qualifying under the Business for Self Alt A program.

This program will allow for the purchase of a home with as little as 5% down payment.

I encourage you to schedule a free 20-minute Mortgage Strategy Session. You can see my schedule here: Click Here To Claim Your Strategy Session to go over your particular situation.

Dominion Lending Centres Edge Financial
8 Sampson Mews, Suite 201 | Toronto | ON | M3C 0H5, FSCO #10710

Please visit the Financial Services Commission of Ontario Directory for more information and to check licensing status at http://mbsweblist.fsco.gov.on.ca/agents.aspx