Is it possible to get under 20% down payment for ...
... non owner occupied house ?
I keep reading American investors of how they got rental investment for very little down payment , can we do that in Canada ?
I asked two banks and both said 20 percent is a must
Sam.
In the states the lowest is 20% through conventional financing and Canada has the same.
Lower than 20% is not going to be conventional.
20% is the barrier of entry in Canada.
Rarely do I see short term scenarios where a bank will fund a project with less, and the one I have seen was a very special circumstance.
Relationships with private lenders will give you your downpayment if you find a property in your target market that justifies their investment.
The new Federal Government incentive doesn't help much but may be an option to consider.
You can always get a 75% LTV loan from the bank and a 15% VTB from the seller, so you would only need 10% down. As Sol mentioned, private lenders can provide equity or debt for the downpayment portion. You can have private lenders fund your deal, it's rare but I've had deals where I've funded more than 100% of the purchase price from a private lender.
In terms of regular transactions though, either save up the 20% or find someone else who can bring it to the table. You always need cash, it just doesn't need to be yours.
@Sam Hanaa
I’m not sure about Canadian standards but I am closing on two single family homes in the U.S. for 10% down going through a smaller local bank. Maybe the same can be done there?
Had a call with Bank of Montreal last week.
They offer 5% down if you want.
As a non-resident it’s 20% minimum, but if you have a Canadian partner involved (could be 1% of your ‘company’, they told me they don’t ask how many shares each have), you can still get the 5% down.
Erik is this for non owner occupied rental property? If that’s the case I would be curious to find out but it’s unlikely. Usually the 5% applies to owner occupied property as they are insured mortgages
I've heard of people opening a business . Going to small local banks and getting lines of credit . And use use that as their down payment.
Risky but if you got enough cash flow to cover both mortgage and line of credit payments.
Originally posted by @Dillon Marshall:
I've heard of people opening a business . Going to small local banks and getting lines of credit . And use use that as their down payment.
Risky but if you got enough cash flow to cover both mortgage and line of credit payments.
I have business line of credit , but the interest rate is too high to think in any passive (or semi passive ) investment that I can use that funds for.
@Sam Hanaa if it's owner occupied and 4 units or under my understanding is that you can go down to 10% but amortization periods max out at 25 years and CMHC fees do apply.
If you insure your loan through CMHC, any bank can go down to 5% cashdown, but you need to have the "intention" to occupy the property. The word "intention" is important here. This only applies to single-family houses or duplexes, and then it goes up to 10% for owner-occupy triplexes and 4-plexes. Finally, CMHM can also insure your mortgage for buildings of 5 or more units, but cash down will still be 20% on the residential side (it actually goes up to 25% in commercial). Hope this helps!
Originally posted by @Guillaume D.:
If you insure your loan through CMHC, any bank can go down to 5% cashdown, but you need to have the "intention" to occupy the property. The word "intention" is important here. This only applies to single-family houses or duplexes, and then it goes up to 10% for owner-occupy triplexes and 4-plexes. Finally, CMHM can also insure your mortgage for buildings of 5 or more units, but cash down will still be 20% on the residential side (it actually goes up to 25% in commercial). Hope this helps!
Great details , thank you
I just talked to one of my buddies and RBC is giving him 11% down.. Yes he is paying CMHC but RBC really liked his income ratio.. His PITI was less than 40% of his income..
I think bank history goes a long way beyond just credit score.. He is also a first time home buyer..
It may be a challenge for an investment property
If it’s a property that will be occupied it’s usually not a problem to get 5%. But for an investment property it’s a different story, you can rely on CHMC and usually the minimum down is 20%, sometimes 25%
Originally posted by @Hai Loc:
I just talked to one of my buddies and RBC is giving him 11% down.. Yes he is paying CMHC but RBC really liked his income ratio.. His PITI was less than 40% of his income..
I think bank history goes a long way beyond just credit score.. He is also a first time home buyer..
It may be a challenge for an investment property