Understandably, it can sometimes be difficult to set aside a down payment to buy a new home. The USDA Home Loan, VA Home Loan, and FHA Home Loan help you become a homeowner without accumulating the full down payment and without having to save for years. Your banker tells you that this is however not possible? Indeed, most banks require that their customers have acquired a down payment by saving with their resources, or even thanks to a donation from the family. However, some banks accept that the down payment comes from borrowed funds. Yes, it is possible to buy a home without a full down payment. But is it legal?
The answer is yes, as long as you tell the bank that your down payment is from a non-traditional source of funds.
What are the eligible sources?
- The borrowed funds that have no length from the transaction of purchase or sale (such as personal loans, lines of credit or credit cards)
- The donation of a member of the non-immediate family (members of the immediate family are the father or mother, son or daughter, brother or sister, a grandfather or a grandmother, a legal guardian, or a legally dependent).
Does your bank tell you that such a transaction is no longer allowed?
Many banks do not accept non-traditional down payments when it comes to buying a home. If a bank informs you that it is no longer allowed, it simply means that it is the bank that prohibits it – and not all the institutions.
A mortgage broker knows his market and can guide you to the financial institutions that will agree to finance you.
Over the years, PIF Lending has been able to count on a solid network of banks. Today the company offers you the benefit of its expertise, all without risk and at no cost to you.
What are the borrower’s eligibility requirements for purchase without a down payment?
A minimum credit score of 650 is required. No need to have a perfect credit report! You just need to make sure that you have not made any late payments for the past two years. It should be noted that ex-bankrupts or people who have resorted to a consumer proposal are not eligible.
Who is eligible?
- Borrowers must have permanent employment with no probationary period.
- Borrowers should have incomes that have been stable or increasing over the past two years.
- Self-employed workers are accepted on the basis of their past two or three-year earnings history.
Are not eligible:
- Social assistance
- Unemployed people
- Seasonal workers
Who can buy a property without a down payment?
- Co-borrowers who do not occupy the property are accepted (they must be immediate family members and appear on the title).
- Guarantors who do not occupy the property are not admitted.
Are there any other requirements for purchasing?
- The borrower must prove his ability to cover start-up costs of at least 1.5% of the purchase price.
- Closing costs or start-up costs are used to pay your notary, as well as transfer duties.
What are the eligible properties?
- Divided condominiums or single-family homes.
- Properties with a maximum of two units, one of which must be owner-occupied.
- New construction covered by a new home warranty program approved by the lender.
- Existing properties offered for sale by the network of real estate brokers.
- Properties located in a sustainable real estate market, where there is a real demand for resale.
The expected remaining economic life of the property must be at least 25 years.
The following are not eligible:
- Properties with a business or a farm
- Mobile homes
- Commercial buildings
Contact a mortgage broker now!