How to buy a house with little or no down payments.

Saving enough money for a down payment, moving costs and an extra pillow of emergency savings may
as well be the most difficult aspect of buying a house. People who want to experience the pride of
owning a home are sometimes held back by the lack of cash. The reason is because a number of housing
loans require a down payment of up to 3.5%. Nowadays in neighboring countries like the U.S, almost no
conventional loans are given without a down payment of 3-5% of the price of the house. However, some
buyers may qualify for a loan with a no down payment policy, through quite a number of programs
available on the U.S market.
The Canadian Association of Accredited Mortgage Professionals discovered that more than one in four
renters possess less than $5000 saved for a down payment on a house. But because a lot of them are
hell bent on owning a home, they end up using one of the down payment options below, saving them
from using little or none of their money. If you desire to own a home but do not have the money for a
down payment, the following options may be of benefit to you.
Borrowing from other credit sources
You can borrow your down payment from a line of credit, credit card or a personal loan. If you are credit
worthy, your lender may let you put your down payment on a VISA at 20% interest. One problem with
this option is the higher interest rate. Sometimes this can be even higher than a regular mortgage.
Getting a cash-back down payment mortgage
In many provinces in Canada, lenders that are not regulated federally, e.g. credit unions, still offer a cash
back down payment mortgage. A few of them give you 5% cash to use for your down payment while you
find the money to take care of closing costs, including inspection and legal fees.

Making use of a gifted down payment

Several lenders will consider giving you a gifted down payment assuming the donor is a parent,
grandparents or even a sibling. This option is not without its challenges though. The most obvious being
that, a small number of borrowers fraudulently claim the down payments as gifts. This puts the lender
more at risk. To prevent this, both the borrower and the lender need to sign an agreement that the
gifted fund is non-repayable.

Special lender and government programs

Various Canadian provinces provide down payment assistance grants. Such programs are programmed
for s people with low or average income. Despite being higher risk for borrowers, they are permitted to
buy a house with no down payment at all.
Borrowing from your RRSP (HBP)
If you are a first-time buyer, you can borrow money to the tune of $25,000 from your RRSP. This loan is
different from other types because

1. You are borrowing money from your retirement piggy bag.

2. You can choose not to pay the loan until the second year after youve made your withdrawal.
3. You stand the risk of losing years of tax deferred investment gains. A decision you might later
regret.
All these alternatives to down payment have one thing in common, they come with some degree of
added risk. So, if you are thinking of buying a house with no down payment, always remember one
thing: Buying a house without your own money is not a decision you take lightly.