Canada- What are my options in obtaining creative financing?

Question

Hi there BiggerPockets!I'm 23 years old, trying to figure out how to obtain financing. I have 17k saved and ready to go for a downpayment, and I have spotted an opportunity to buy a 110k condo that will give me positive cash flow. The problem is that I am still looking for a full-time job (just finished school), so my downpayment is static. I am confident in my ability to qualify for a mortgage, due to my cosign.My questions are twofold: Can I purchase my "first home" and rent it out immediately? I don't have enough to come up with the 20% downpayment I need for this opportunity.If I were to obtain the loan by informing my lender that I plan to live there, even though I would immediately rent it out, what would be the consequences? Any and all relevant information on this subject would be greatly appreciated! I'm eager to jump in, and I refuse to take no for an answer!Many thanks!

-Mike

Mike Sos · Answer

Thank you both for your valuable input!I have multiple part-time jobs that do give me income, so I'm not completely screwed with financing. Finding a job that I actually like is the challenge. Mortgage fraud, that's what I was looking for. Thanks so much!

Roy N. · Answer

@Mike Sosnowski

Your biggest hurdle in seeking financing will be the lack of a job.  No conventional lender, or private lender, is going to subscribe to a mortgage were the mortgagor does not have a income stream to ensure repayment.   I would focus on the job hunt and continue educating yourself about real estate on the side.  Once you have secured employment, financing will be possible.

When it comes to purchase, if you qualify for the first time homebuyers programme under CMHC, your downpayment would be 5%, but the CMHC insurance premiums will be added to your mortgage balance.   If you do not qualify for the first-time homebuyer, you would likely still be eligible for a high-ration mortgage and 10% downpayment,

In both of the above instances, you will be required to live in the home.  If you were to turn around a rent it out instead, you would be committing mortgage fraud, the consequences of which include the possibility of rent-free living at a government facility.

Instead of buying into the GTAs overbuilt condo frenzy, you could - once you have a job - find yourself a duplex/triplex/quadraplex - all of which are considered residential properties - live in one unit and rent out the others.  In this manner, you could still use a high-ratio mortgage and lower downpayment.

Curt Davis · Answer

I dont know what the lending guidelines are for living in Canada but one thing you can do thought it might feel slow to you is buy a primary residence and actually move into it and live there for the minimum amount of time required and then when you have enough saved up you an buy another home like you did the first one and move out and into the new one.

Not currently having a job will hurt your ability to get a home even with a co-signer.

Good luck