One of the main questions people wonder when buying a home is "how will I come up with the down payment?" Most people don't realize how many options are available to them for down payment and the list gets even bigger when dealing with a mortgage broker! 5% of the purchase price of a home is the minimum down payment required by all lenders in Canada for a mortgage. Here is a list of the Top 5 down payment options:

1) SAVINGS - Savings need to be accumulated gradually in a bank account, tax free savings account or investment account. Lenders do not allow savings as an option if you have only had the money in your account for a few weeks. Most lenders usually ask for 90 days of your bank statements to verify if all or most of the savings for down payment have been in your account for at least that long.

2) RRSP's - The Government has a program in place called the 'Home Buyers Plan' that allows First Time Homebuyers to use RRSP's for the down payment. Each person/first time homebuyer can withdraw up to $25,000 without penalty. The funds withdrawn for the down payment have to be repaid back to your RRSP account within 15 years.

3) GIFTED FROM FAMILY - You can use part or all of your down payment from gifted funds received from immediate family members such as parents, grandparents or siblings. The person(s) that gifts you the funds will sign a letter for the lender that states the amount of gifted funds and that they never have to be repaid. The lender will also ask for proof of the exact amount of gifted funds deposited into the home buyers bank account.

4) BORROWED FROM CREDIT - Only a select number of lenders will allow you to borrow your down payment from credit sources such as a line of credit. Other credit conditions may apply so if this is the option you would like to go ahead with, I can help find the available lenders to offer this and see if you qualify.

5) LENDER CASHBACK - Mortgage brokers deal with a very select few lenders that offer this type of product. Lenders will offer up to 5% cashback that can be used for down payment, also sometimes referred to as a $0 down mortgage. Usually a minimum credit score is required to qualify for this type of mortgage. The cash back is free from the bank but the interest rate you pay for this product is usually 2% higher than a regular mortgage rate. So, in the end you end up paying that amount back to the lender in interest costs but it is still a great option for those that don't have the above 4 options available to them for a down payment. For more information on these down payment options, please contact Tamara!

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