Purchasing a home or property can be stressful and overwhelming, especially the first time. You may have been given information about down payments or mortgages from family and friends who may be trying to be helpful, but they may not know all the facts. Our Anne Winch Real Estate Team would like to demystify the purchasing process with these 5 tips.
Is it 20% for a down payment?
One of the biggest myths out there is that you need to have a 20% down payment to buy a property. You can put the minimum 5% on the first $500K and 10% above $500K.
You don’t need 20% down to buy a property as a first-time home buyer. If you live in the house as an owner-occupied home, you can put down the minimum. You cannot use rental income for the downpayment of an owner-occupied property.
(However, if you put down less than 20% you will have to have CMHC insurance on the property and you may have higher interest rates.)
When can I use RSPs to buy my home?
You are aware that you can use your RSPs under the First Time Home Buyer Incentive Program to purchase a home, but did you know that you can use RSPs a second time? You can use your RSPs a second time if you have paid back your RSPs from the first home and there have been 4 years between the first and second purchase or there has been a relationship breakdown.
Can partners buy a home?
A partnership does not have to be romantic to purchase a property. It can be two friends. Again, you can use RSPs but the same holds true for the length of time between the first and second purchases (4 years between purchases if using RSPs) or if the relationship breaks down just like married couples.
When can I use rental income?
You can use projected rental income if you are buying an investment property to help you qualify. You don’t have to use someone’s tenant’s income or lower than market rents to help you qualify.
Can I use a zero down payment?
Zero down payment does not exist. Stay away from this, it is a scam! You can borrow from your line of credit or credit card. If you do this, it does come with higher insurance premiums and make sure you can afford the debt payment. This is not a good idea to borrow for a down payment like this as it works against you as you must borrow more in the long run.
We hope that these tips will help you understand the borrowing process a little better. If you need any further help with the purchase of a home, please do not hesitate to contact our Team.