No Down Payment Mortgages

TR Mortgages is proud to be one of the few providers of no down payment mortgages in Alberta. Although they are less common, no down payment mortgages are possible in Canada, and our team is here to guide you through the process!

Can You Get a Mortgage With No Down Payment?

Buying real estate in Canada typically requires a down payment, which can be challenging for many. However, it’s possible to purchase a property without saving up for a down payment by borrowing the amount needed. This is known as a no down payment or zero down mortgage. While you still need to make a down payment, you don’t need to have the funds in your savings. Instead, you take out a loan to cover the down payment.

How Do No Down Payment Mortgages Work?

Typically, when buying a house, you need at least:

5% down for homes under $500,000
10% down for homes over $500,000
20% down to avoid paying mortgage insurance

For example, for a $400,000 house, you would need at least $20,000 saved up for most mortgages. With a zero down mortgage, you borrow the down payment. Instead of having $20,000 in your savings, you borrow that amount.

How Can You Borrow a Down Payment?

RRSP Loan: An RRSP loan allows you to borrow money to put into your RRSP. You can then use the tax savings or refund to increase your down payment or pay off the RRSP loan. After 90 days, you can withdraw the money to use as a down payment.

Personal Loans: Personal loans offer flexibility with rates and repayment terms, making them a viable option for a no down payment mortgage.

Credit Cards: Depending on your credit limit, you could use a credit card for your down payment. However, this method comes with high interest rates and is generally not recommended.

Line of Credit: A line of credit typically has a more favorable rate than a credit card, though it cannot be from the same financial institution as your mortgage.

Family Assistance: Around 30% of people receive help from their families. This interest-free option is ideal for those who have this support available.

Is It a Good Idea to Get a Mortgage with No Down Payment?

Consider this option only if you’re confident you can repay both loans. You will have to manage two loan payments each month, along with other expenses. Here are some pros and cons to help you decide:

Pros:

No need to save for a down payment
Ability to own a home and build equity
Potential to avoid CMHC default insurance with a 20% down payment loan

Cons:

Managing two loan payments simultaneously
Higher risk of payment difficulty if interest rates increase
No initial home equity

Is a No Down Payment Mortgage Right for You?

Buying a home involves more than just the purchase price. Additional costs include home inspections, land transfer taxes, and legal fees. Ensure you have enough savings for these expenses and room in your budget for loan and mortgage repayments, as well as other living costs.

Contact TR Mortgages Today

Making mortgage decisions can be complex, but you don’t have to do it alone. The mortgage experts at TR Mortgages are here to help you evaluate your options, including a zero down mortgage.

780.340.1482