No Downpayment

The zero-down mortgage isn’t for everyone! But for the right buyer – struggling to save up a hefty down payment while paying rent – the zero-down mortgage can be a tremendous financial boost: enabling them to make the step to home ownership and begin building home equity. There are three ways to go zero down – borrowed down payment, cash back or gifted.

Borrowing the down payment is typically done through a loan or unsecured line of credit. The loan amount will be used in your qualifying calculation, but it does then allow you to secure a mortgage for 95% of the purchase price at fully discounted rates.

Cash back mortgages provide the cash upfront for some or all of the down payment, although the lender charges a higher interest rate, and if you pay out your mortgage before your term is up, you’ll be required to pay back some of the down payment portion of the total mortgage. You’ll also need to qualify based on that higher rate.

Gifted down payments, for instance, money provided from a parent, are not used in the qualifying calculation and allow you to qualify for discounted rates. The person gifting you the money must be a blood relative and needs to sign a gift letter saying that you are not required to pay back the gifted money at any time.

Remember too that you’ll need to be able to prove your income: easiest if you’re salaried or an hourly employee. And you should have a good credit rating. Not sure what your credit rating is? Before you do anything (like cancelling credit cards, etc), talk to us.