#7 Decline - No Down Payment

Until October 2008, Canadians could purchase a home with $0 Down payment. In order to qualify for that type of mortgage, you needed to have a credit score of 680 or greater. The $0 Down Payment program was eliminated by the Federal Government, via CMHC, due to the mortgage meltdown in the USA. CMHC no longer wanted to be involved in insuring these riskier mortgages.

As a result, many people take themselves out of the market because they do not have a down payment and think there is no possibility of purchasing a home. Other people go to their bank and are told that they do need a down payment.

However, if you were to talk to an independent mortgage broker, like Mortgage Managers, you would learn that you can still purchase a home without a down payment!

Some of our lenders understand that there are a number of Canadians that have good jobs and good credit, but just have not had the opportunity to save a 5% down payment. Therefore, they have created mortgage programs for these clients which are often called 5% Cash Back mortgages. Essentially the lender will finance 95% of the purchase and "give" you a separate cheque for the extra 5% to be used for your down payment. I say "give" because the lenders do charge a higher interest in order to recoup the 5% over the 5-year term of the mortgage.

Not all 5% Cash Back mortgages are the same. Many lenders actually require you to have 5% saved in you bank account before they will give you the additional 5% cash back.