0 Down Payment Home Purchase in Edmonton

Question:
I'm looking for 0 down mortgage and I'm the only one applying for the loan because my wife has a poor credit.

Answer:
Yes you can certainly still apply for a mortgage to purchase a home in Edmonton. Today (June 2013), the zero down programs are structured a little differently than they were back before June 2012.

Today, the minimum down payment required is 5% of the purchase price. However, you don't have to have that money saved.

You are allowed to arrange financing for the down payment, this is considered a flexible down payment mortgage:
First, you have to arrange for a loan or a line of credit that will be enough to cover the down payment.

For example, if you are purchasing a home for $300,000 then you will need a loan or line of credit for at least $15,000. If you have absolutely no savings, then you should also arrange enough additional cash to cover closing costs. The bank will need to confirm that you have enough cash equal to 1.5% of the purchase price. In this example, that would be $4,500.

To purchase a home in Alberta, you wouldn't pay that much money, but you do have to confirm you have access to at least that much money.

Second, you will meet with a mortgage broker to arrange a mortgage pre-approval to purchase your home.

When you purchase a home and use a loan for the down payment, then the lenders that allow this will require that you have very good credit. That is, your beacon score must be higher than 680. Your mortgage broker will check this when you request the mortgage pre-approval.

The payments for your loan will also be included in the calculations to see how much you qualify for. This website has an excellent description of the mortgage pre-approval calculator and the mortgage pre-approval process visit www.MyMortgageBroker.com.

In Summary, to qualify without having savings of your own you will need:
1) have good credit (beacon score over 680)
2) have enough income to make the mortgage payments and the loan payments for the down payment
3) have enough additional cash to cover potential closing costs (the bank calculates this as 1.5% of the purchase price)

If your credit score isn't high enough to qualify for this flexible down payment mortgage option, then you could try the RRSP Strategy that I discuss here.

If you have further questions or need clarification, please let me know.

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