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Show Me the Money

I often I get the question ,”I know I need a down payment; however, what are my options and what documents would you need?”

Your down payment can come from a combination of sources as long as we have a total of 5% of the purchase price. This is the minimum amount whether you are purchasing for the 1st time or 30th time, as long as you intend to live in the home yourself as your primary residence, vacation home or 2nd home.

Down Payment Options:

Savings: When the down payment is coming from savings, you must be able to show a 90 day history of your bank account. The bank statement must clearly show your name, the financial institution and account number as well as the dates of all transactions and a current balance. For any large deposits, you must be able to show where the money came from.

Gifts: The down payment can be gifted from your immediate family only. Lenders may require that you must sign their individual gift letter. For large gifts, the person gifting the down payment may have to clarity where the money came from. All lenders will require the gifted funds are in your account approximately 15 days prior to close.

RRSP: If you are a 1st time home buyer or have not owned or purchased a home for the past 5 years, you can withdraw the down payment from your RRSP’s via the Homebuyer’s Plan. You are allowed to withdraw a maximum of $25,000 and it have to up 15 years to pay it back. Generally, for each year of your repayment period, you have to repay 1/15 of the total amount you withdrew, until the full amount is repaid to your RRSPs. Your repayment period starts the second year following the year you make your withdrawals.

Sale of a Home: If the sale happens on the same day as your purchase, you will need a copy of your Unconditional Offer to Purchase and your mortgage payout statement. If the sale has happened previously, we will require a copy of the Statement of Funds Received and Disbursed from the sale of your home, given to you by your lawyer and a copy of your bank statement to confirm that the money was received and is still in your possession.

Lines of Credit: If you have a Line of Credit, sometimes called a HELOC, secured by your home we can take money from that. If you don’t own a home, but have good credit, we can set up an unsecured Line of Credit and use that for your down payment.

Cash back: There are still a couple of lenders that offer a cashback option. Interest rates in this option are higher.

Hopefully these tips help you. If you have questions or concerns, please contact me.

Whatever your dream is, as a Mortgage Associate it is my job to make this financial decision less stressful for you; to research your options and to help you make your dream your reality.

   

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