Wondering if you can get a mortgage without a down payment? The simple answer to this question is yes but no. Though there may be some advertisements out there stating NO DOWN PAYMENT, buyer beware!!! Here in New Brunswick technically speaking you must have at least 5 % to put down on your mortgage. I bet your thinking “technically speaking” aren’t you!! That’s right there are ways above and around every rule.
What you need to know is more often than not you are going to pay more for this type of mortgage. There are a few different ways you can obtain a “no down” mortgage without paying higher rates. The first being “gifted down payment”. A gifted down payment is when an immediate family member gives you the cash to use as you down payment. It makes sense that a parent would help their child obtain their first home. The bank will allow you to use a gift as your down payment. This requires you to have proof that this was a gift and not a loan. Typically this is in a letter format.
You may also use gifted equity in the home. Usually this is when you are buying a home from a family member and they give you some of the equity in the property to use as the down payment. Normally a bank will only accept this if the equity is coming from a family member however, should you find a property and they are willing to gift some of the equity you may be able to use that as your down payment.
If you own a piece of property and want to place or build a home on it, than you may use the equity in the property so long as there is no money owing against it. This is typically used if you should inherit an older home or property and want to build or upgrade the home.
Some banks will allow you to use a cash back on your mortgage as your down payment. This is an option that is not readily available to the general public. There are more stipulations in qualifying for this type of mortgage and the interest rate is always higher than most other rates. This is only recommended if you really need the cash back. And many times banks want to see the funds in your account for a down payment before they will approve this type of mortgage. Due to the cost and terms of this mortgage we do not normally recommend a cash back mortgage.
So to answer the question again, yes but no seems a little clearer now. Give us a call today and one of our Team Jardine agents will assist you and answer any questions you may have in regards to a no down payment mortgage.