Buy a House with No Money Down

If I told you that you could buy your first home with say only $2500 in the bank, would you be interested? What if I told you that there are no tricks, no gimmicks, nothing illegal…. Would you want to hear more? If so keep reading.

There are actually several ways that you can buy your first home today without saving for a down payment. Here they are:

• RRSP Home Buyers Plan
• Cash Back Mortgage
• Flexible Downpayment Program

RRSP Home Buyers Program

Do you or you and your significant other have RRSPs with the equivalent of 5% of the purchase price of the home you would like to buy? You can withdraw this money with no penalty to use as a down payment.

What if you don’t have enough (or any) money in your RRSP? Here’s a trick. Get an RRSP loan, let the money sit in your RRSP for 90 days and then you can use it as a down payment. As a bonus you will also get a nice tax refund which you can use to pay off part of the loan. Now is actually the perfect time to do this as tax season is just around the corner.

Cash Back Mortgage

What if I told you that a bank will give you the 5% down payment?  Okay so what’s the catch? The catch is that it’s not exactly a gift. (When have you ever gotten a gift from a bank?) You will have to pay them back. How you do that is by paying a higher interest rate your mortgage for the first 5 years. Think of it as a mortgage for 95% of the value of the house and a loan for the other 5%.   The interest rate is higher on the ‘loan’ part but still, it’s a great way to stop renting and start building some wealth.

Flexible DownPayment Program

As long as you are going to live in the home, you can also borrow the down payment. Depending on your credit history, your income and your current debts this might be the best way to go.  Basically, you go out and get a loan for the 5% downpayment. The best way to do this is either a loan which is repayable over 15 years or a line of credit. There are some fancy calculations involved that determine whether you can use this method, but it can work to get you out of the renting trap.

“Hey,  what about that $2500 you mentioned earlier?”

What you will need in cold hard cash is 1.5% of the value of the house for closing costs. This you can’t borrow. But here is another little trick.  Since you are a first time homebuyer you qualify for a Land Transfer Tax Rebate of up to $2000. There are some lenders who will take that into consideration and approve a deal with less than the 1.5% in cold hard cash.

So there you have it. What are you waiting for …rent day to come around so your land lord can get richer. If you have any questions feel free to write a comment here and I will answer or email me at jeff@yourlocalexperts.ca, use the chatbot at the bottom of the screen, text me or call me at 519-803-2765.