This was a very popular program before all the troubles in the sub-prime market. You could purchase a home without a down payment with reasonable rates.

Due to all the issues in the world the majority of lenders pulled away from this product and went back to a client needing a down payment to get a mortgage.

There are still some lenders offering this program through Genworth and also CMHC.

The program is easy to use and apply for but there are some criteria that all clients must meet. The first is credit. You must have a strong credit score (check this link for some great information regarding credit scores and what they mean).

There are various ways to get the money for the down payment. These are borrowed funds (we must use the repayment of this loan to qualify the deal), gift, sweat equity and cash back incentives from a lender. The latter is the most popular. For ease of explanation the lender will send a 5% cash back to the lawyer on closing. You as the buyer must have at least 1.5% of the purchase price for closing costs proven prior to day of closing.

The disadvantage of this program is the lender will only offer the 5 year bank posted rate. At the time of this blog that rate is 5.39%. If you decided to renew or payout the mortgage within this 5 year period then the lender will require a portion of this 5% cash back repaid back to them. This is over and above the pre-payment penalty they will charge.

You are allowed a gifted down payment from an immediate family member and since it is a gift then you are allowed to qualify for the low discounted rates available in the market. In my opinion this is a better way to go.

If this is a product you are interested in then please contact myself to discuss further. There is no fee for my services but together we can come up with the best available product that will suit your situation and comfort level. There are many products available and they are designed to help you become a homeowner. Remember to educate yourself as it will save you money in the long run.

Eric Gall is a mortgage specialist for TMG Atlantic. If you are purchasing, refinancing or renewing your mortgage contact Eric or check out his website and apply online.