Thursday, 22 February 2018
DroneView Packages
This Old House - Do-it-Yourself

Is Zero Down Payment Right For You?

Written by Posted On Tuesday, 09 March 2004 00:00

Canadians who have been madly saving for the minimum five percent down payment required to buy a new home and qualify for mortgage loan insurance can now forget about it. Down payments have just gone to zero.

Our federal housing agency, Canada Mortgage and Housing Corporation (CMHC), has expanded eligible down payment sources to enable many Canadians to realize their home ownership dream sooner than what would otherwise be possible.

As of March 1, 2004, the down payment may come from any source including lender incentives and borrowed funds. Previously, would-be homeowners were required to provide the down payment from their own or immediate family resources. However, borrowers will still have to prove their ability to meet their debt commitments in order to qualify for mortgage insurance.

CMHC experts predict that Mortgage lenders will be offering Canadians a variety of mortgage product offerings under this new program, including mortgages with terms as low as six months and fixed, adjustable and capped interest rate loans.

CMHC has long acknowledged that for most people, the hardest part of buying a home, especially the first one, is saving the necessary down payment. The original minimum down payment of 25 percent of the purchase price meant that home ownership was not possible for a large segment of the population. As a result CMHC introduced Mortgage Loan Insurance to lenders. Through this program, CMHC enabled Canadians to finance up to 95 percent of the purchase price of a home. This meant, for example, that someone wanting to buy a home for $125,000 would need just $6,250 or 5 percent of the purchase price as a down payment. At 25 percent of the purchase price they would have needed $31,250.

Mortgage Loan Insurance, which is purchased through the lender at the time the mortgage is arranged, protects the lender against payment default. This insurance should not be confused with Mortgage Life Insurance which is personal insurance designed to pay off the mortgage should the borrower die with debt outstanding. Along this line, there is also available mortgage insurance which will make mortgage payments in cases of job loss or health problems that keep you from earning.

Mortgage eligibility will still include conditions like the following:

  • The home which is to be occupied as your principal residence is located in Canada.

  • You can demonstrate that you have a down payment, that is, the difference between cash and mortgage principal.

  • Your home-related expenses do not exceed 32 percent of your gross household income based on Gross Debt Service (GDS) calculations.

  • Your total monthly debt load does not exceed 40 percent of your gross monthly household income according to Total Debt Service (TDS) calculations.

While saving a down payment may no longer be essential to home buying, it may or may not make home ownership more affordable in the long run. Although appealing at first glance, examine your situation from all angles before making commitments on paper.

Rate this item
(0 votes)
PJ Wade

Futurist and Achievement Strategist PJ WADE is “The Catalyst”—intent on Challenging The Best to Become Even Better. A dynamic speaker and author of 8 books and more than 1800 published articles, PJ concentrates on the knowledge, insight, communication prowess, and special decision-making skills essential for professionals and their clients who are determined to thrive in the 21st-Century vortex of change.

PJ Wade's latest business book, What's Your Point? Cut The Crap, Hit The Mark & Stick! ( further proves PJ's forward-thinking expertise and her on-point ability to explain technical, even non-verbal, communication details in practical, understandable terms. Print publication: Fall 2017

PJ: “What's Your Point? — the pivotal 21st-Century business question—must be answered before you open your mouth, hit a key, or tap anything. Too often 'Your Point' is not clear to you, and communication remains an expensive illusion.”

As The Catalyst, PJ concentrates on enhancing communication ROI for experienced advisors, executives, entrepreneurs, business owners, and other savvy professionals, who may not have received as much formal training in communication as they have in their own field.

PJ’s on-point professional development programs and featured presentations start where other business content leaves off. What's Your Point?  programs, presentations, and content present the rich combination of practical suggestions, game-changing concepts, and on-point perspectives essential to those rising to the challenge of modern effective business communication—online & off.

Onward & Upward — The directions that really matter! Reach PJ at and visit her Blog:

Realty Times

From buying and selling advice for consumers to money-making tips for Agents, our content, updated daily, has made Realty Times® a must-read, and see, for anyone involved in Real Estate.