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A BC first time home buyer can buy with 5% down payment if he is qualified for CMHC or Genworth financing. If you are a first time home buyer, check out if you are qualified to withdraw your RRSP savings as down payment under the "home buyer's plan". In addition, you should find out for sure you are exempted from paying the British Columbia "property transfer tax".
When you are buying a home with less than 20% down payment, your mortgage is a high ratio mortgage. You are required to buy a home mortgage insurance to protect your mortgage lender against loan default. The insurance premium charged is dependent how much down payment is provided by you. The insurance premium may range from 1.00% to 2.75% of your mortgage amount.
Some lending guidelines for high ratio mortgage financing are:
1). The home must be located in Canada and is to be occupied as your principal residence.
2). Your payment must not exceed 32% of your gross household income. This includes payment of principal + interest + property taxes + heat + condo fees.
3). In addition to the above ‘shelter costs’, your total other debts including credit cards, car loans and personal loans must not exceed 40% of your gross annual income.
4). You must be able to cover closing costs equivalent to at least 1.5% of the purchase price.
5). You meet the lender's eligibility requirements regarding income, employment and credit worthiness.
If you like to find out more information on buying your home, you can contact James Wong at 604-721-4817.
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