A leading challenge preventing many buyers entering the home ownership marketplace is their misunderstanding on down payments. Many potential buyers feel that the cost of down payments is too high for their budget. This may mean they wait to purchase a property. But by analyzing down payment options, buyers may find they have more flexibility than they first thought on the road to home ownership. In this article, our expert team will highlight four myths of down payments.
Myth 1: A 20% Down Payment is Required
One of the most widely disseminated myths concerning down payments is the idea that a 20% down payment is required to complete a home purchase. This simply isn’t true. Within the current Canadian real estate marketplace, buyers can begin the purchase process with a 5% down payment on their new home. To avoid having to pay insurance fees, a 20% down payment is required, but a 5% down payment can offer many buyers the ideal path to purchasing real estate.
Myth 2: Down Payment Assistance is Only for First-Time Buyers
While there are many marketplace programs designed to help first-time buyers enter the marketplace, there are a multitude of options for all homeowners seeking assistance for their down payment. For example, many local lenders will offer cash-back down payment mortgages, through which they will pay for the 5% down payment and then offer buyers a mortgage directly, to streamline the purchase process.
Myth 3: Newcomers to Canada Can’t buy a Home
New residents of Canada don’t necessarily have to wait until becoming a permanent resident to invest in a home. Some banks won’t lend to temporary residents, it’s true. But there are many that will, so long as the prospective homeowner has a work permit with more than 6-months remaining before it expires. Also, new residents may just be starting to build up a credit score, but can choose instead to show a credit bureau history from another country. Any paperwork that demonstrates reliable and regular payments of rent or utility bills will also help.
Myth 4: It is Too Expensive to Buy in the Marketplace
A common myth in the current Canadian market is that it’s too expensive to buy a home in Canada. This is simply not true, as lenders offer a range of programs to help buyers enter the marketplace and find homes that meet their budgetary parameters. There are many unique paths to homeownership for the proactive and committed buyer.
To uncover more on the myths of down payments in Canadian real estate, contact our mortgage experts directly!