(June 23, 2023)
Don’t want to miss out on the next blog post? Click Here to have future issues emailed directly to your inbox!
Securing a mortgage with a minimum down payment of 5% is an attractive option for many potential homeowners. In this blog post, we will delve into the main eligibility criteria for a mortgage program that requires a 5% down payment. Understanding these criteria will help you navigate the application process and determine if you meet the requirements for this type of mortgage.
OCCUPANCY REQUIREMENT:
To qualify for this mortgage program, you must plan to occupy at least one unit of the property. Whether you reside in the property or one of the units within the property (i.e. duplex), your intention to occupy the space is a key criterion for eligibility.
DOWN PAYMENT VARIATION:
For single-family dwellings and duplexes, the minimum down payment requirement is 5%. However, if you are purchasing a triplex or fourplex, the minimum down payment increases to 10%. It’s important to note this distinction when considering the type of property you intend to purchase.
PURCHASE PRICE LIMIT:
The property’s purchase price must be below $1 million to qualify for this mortgage program. For purchases up to $500,000, the minimum down payment remains at 5%. Beyond $500,000, the minimum down payment increases to 10% for the remaining balance up to just under $1 million.
MORTGAGE TYPES:
This mortgage program allows for a variety of mortgage types, including fixed-rate, standard variable, capped variable, and adjustable-rate mortgages. You have the flexibility to choose the mortgage type that best suits your financial goals and preferences. A broad spectrum of terms are also available, ranging from 6 month to 10 year terms.
AMORTIZATION PERIOD:
The maximum (and default) amortization period for this mortgage program is 25 years. Amortization periods greater than 25 years are available, but only for conventional mortgages (mortgages with down payments that exceed 20%)
QUALIFYING INTEREST RATE:
The qualifying interest rate for this mortgage program is calculated as the greater of the contract rate plus 2% or 5.25%. This ensures that borrowers can handle potential interest rate increases and manage their mortgage payments effectively. (this is the qualifying rate policy as of the date of this blog post, inquire with Marko Gelo directly for the most up-to-date qualifying rate/policy)
MORTGAGE DEFAULT INSURANCE PREMIUM:
As this mortgage program is for purchases with less than 20% down payment, mortgage default insurance is necessary. The insurance premium is a one-time cost that gets added to your mortgage balance. The premium amount decreases as the down payment increases. Click Here to be redirected to one of Canada’s mortgage default insurance providers to view the various premium charges.
INCOME AND EMPLOYMENT VERIFICATION:
Standard income and employment verification requirements apply for this mortgage program. Lenders will assess your income stability and employment history to ensure your ability to meet mortgage obligations.
MINIMUM CREDIT SCORE:
To be eligible for this mortgage program, a minimum credit score of 600 is required. A higher credit score can improve your chances of approval and may result in more favorable loan terms.
ACCEPTABLE SOURCES OF DOWN PAYMENT:
Various sources of down payment are permitted, including personal savings, RRSP withdrawal, non-repayable gifts from relatives or individuals with a legal relationship, sweat equity, existing home equity, proceeds from property sales, and certain Government grants. These options provide flexibility in securing the required down payment.
ADDITIONAL ELIGIBLE MORTGAGE PROGRAMS:
In addition to the 5% down payment program, several other mortgage programs offer similar down payment requirements. These include the Purchase Plus Improvements Program, Family Plan Program, New to Canada Program, and Vacation/Secondary Homes Program. Contact Marko Gelo to discuss the program that best fits your needs.
Wondering if you are eligible to qualify for a mortgage with a minimum down payment of 5%? Call or text Marko Gelo right now at 604-800-9593, or Click Here to schedule a free, no-obligation phone call with Marko.
Don’t want to miss out on the next blog post? Click Here to have future issues emailed directly to your inbox!
Contact Marko, he’s a Mortgage Broker!
604-800-9593 cell/text/WhatsApp | Vancouver (Click Here to schedule a call with Marko!)
403-606-3751 cell only | Calgary (Click Here to schedule a call with Marko!)
Email: gelo.m@mortgagecentre.com
@markogelo (Twitter)
