[Calgarian]

I have a bunch of friends who are buying condo's and houses with help from their parents, and since that is not an option for me I was hoping for some insider info from any realtors we may have here, and any info on getting a mortgage with a very small downpayment.

Thanks in advance

[sync]

how's your credit rating?

[murman]

I have a bunch of friends who are buying condo's and houses with help from their parents, and since that is not an option for me I was hoping for some insider info from any realtors we may have here, and any info on getting a mortgage with a very small downpayment.

Thanks in advance

Call a mortgage broker.

[chuber]

Ask for a raise!

[Calgarian]

how's your credit rating?

Good as far as i know, how do i check?

[240glt]

Find out what your debt ratio is, and as Murman said, call a mortgage broker.

You can get a CMHC insured mortgage with a 5% down payment, otherwise you'll need 30% down payment. A CHMC mortage will cost you about $3500 per $100k. Right now, a $240,000 mortage should run you about $1400 a month, Plus taxes & insurance.

If you're going to be a single income owner, get rid of as much debt as you can before trying to get a mortgage.

[chuber]

^ it is 25%, not 30

[240glt]

Depends on who you go through, and if you get a decent mortgage broker. I'm trying to buy the house next door to mine, and through my bank they want 35% as I won't be living in the house. My mortgage co. (Presidents' choice) might be able to do 25%, but only because I have lots of equity in my current home.

[sync]

Good as far as i know, how do i check?

equifax.

transunion.

[h0twired]

It really depends on how much money you make.

There are lots of calculators online that can tell you how much money you can get from the bank. Just remember that just because they bank says you can get X amount doesnt mean you can actually afford the payments.

[freeweed]

A million factors come into play, and every bank is different, and every property is different, but as a general rule:

You can get a house worth 3x your annual income for a 25-year mortgage and a 5% downpayment. So, if you earn $100,000 a year, you can easily get a $300,000 property, with $15,000 down. What's interesting is that many lending institutions will also let you finance the downpayment. If you already have, say, a $15,000 line of credit, you can use that as your downpayment without hassle.

A hundred other people will come out with a thousand other scenarios, but based on your question I assume you're like many of us - trying to buy the most expensive property the bank will let you get (ie: a starter home in Calgary). 5% down, 25-year mortgage, etc. Unless your credit history is completely destroyed, a mortgage like that is pretty easy to get. I still can't get a $500 Visa but several banks and credit unions had no problem approving me for a mortgage.

Easiest answer? Call your bank. Better yet, a credit union. Ask them how much you qualify for. They'll want all sorts of juicy info about your financial situation, and get back to you in a day or two. After that it's just a matter of finding something within that price range (a challenge in this city). If you're doing this on one income, you'll have fun unless you make a LOT of money or are willing to live in a small condo.

The more you can put towards a downpayment, the more the bank will lend you. Also, some "interesting" options are available now, like 30 and 35-year mortgages, which allow you to borrow substantially more - but saddle you with mortgage payments that much longer.

Just my personal experience, but EVERYONE will recommend a mortgage broker - didn't help me at all, I got a better rate through a credit union. Everyone's different though, they may help you out.

Most banks/CUs have "mortgage calculators" on their websites, so you can put in a rough house value and work out what your payment will be. You're looking at 5-7% mortgage rates these days, and with little downpayment, 25-year terms and up.

And yeah, as another person mentioned - welcome to the land of a $1500-2000+ monthly payment. :P

[shreddog]

^^ One more thing, regardless of how good an offer you get from whichever financial institution, shop it around before you accept it. Particularily if you get something from a lender you have no dealings/history with - often times your own bank will somehow be able to "match it" whereas before seeing the offer they had already given you the "best deal" they could.

[drew]

A Better yet, a credit union.

There are a few Credit Unions in Manitoba that will waive/cover the CMHC fees for your mortgage if your downpayment isn't at 25%. I am not sure if this is the case at any in Alberta...

Be lucky and have a good friend who also hands out mortgages at a national bank. That's what I did...;)

[Kevin_foster]

Most banks dont require CMHC to come into play if you have 25% or more of a downpayment, right?

Best advice? Mortgage Broker.

Next? Buy small, work your way up. Don't get in over your head and shred 'dem credit cards!

[Calgarian]

Great, thank for the info!

[freeweed]

There are a few Credit Unions in Manitoba that will waive/cover the CMHC fees for your mortgage if your downpayment isn't at 25%. I am not sure if this is the case at any in Alberta...


Wait - you're saying you can get a 5% down mortgage and the CU will eat the CMHC fees? That's seriously amazing.

There might be some here, although I never ran into it; I stopped shopping once I found an outfit nearly 2 points lower than the next cheapest :P

[drew]

^ yep. I know at least 2 people who did it. One was a small town CU, the other was at Steinbach CU - which now has a Winnipeg presence.

[chuber]

Wait - you're saying you can get a 5% down mortgage and the CU will eat the CMHC fees? That's seriously amazing.

There might be some here, although I never ran into it; I stopped shopping once I found an outfit nearly 2 points lower than the next cheapest :P

You can do that here to if you have a good relationship with your bank. I deal with the Royal Bank and they waived the CMHC fees with a 20% deposit. I had the cash for 25% and they knew it but I wanted to keep some to be able to pay cash for a travel trailer since I didn't want too many payments because my wife was pregnant at the time and going on mat leave.

[SpongeG]

Can you put 0 Down in Alberta?

BC now has 0 down - which is insane

[chuber]

^ yup and I agree

[Aegis]

Can you put 0 Down in Alberta?

BC now has 0 down - which is insane

Yes, but the financing fees & interest rates on 0% down are a rip-off. Scrounge up the 5%...

[m0nkyman]

And don't forget, you can empty up to 20,000$ of your RRSP tax free to use as a downpayment...

Yeah, I didn't have 20,000$ either. ;)

[ScottFromCalgary]

I believe you can now get 30 and 35 year mortgages with ATB. It may make your payment more manageable, but you are going to pay substantially more in interest (about double) compared to a 25-year mortgage.

[freeweed]

I believe you can now get 30 and 35 year mortgages with ATB. It may make your payment more manageable, but you are going to pay substantially more in interest (about double) compared to a 25-year mortgage.

I think the idea here is that (in theory) your income will rise over the years, so *eventually* you will be able to start paying down more of the principal, thereby shortening your mortgage, thereby paying less in interest. In theory. I'm hoping to knock my 25-year mortgage down to 15 (or maybe even 10) in this fashion, but it's going to depend heavily on future income. I'm having a hard time right now imagining when a $1500-2000 mortgage payment seems "small", and easy to top up, but who knows. Effective minimum wage in Calgary might be $25/hr in 10 years (average annual increase of 10%, not out of the question) if things don't settle down a lot.

However, I shudder to think about someone starting a 35 year mortgage when they're 30 years old (which is the only way a LOT of Calgarians can currently afford ANYTHING), and waiting until the very end to pay it off. Good luck saving much for retirement when you still have mortgage payments.

Then again, a lot of money-smart people say it's better to pay the very minimum on your mortgage, and invest the rest, as you can often get a higher rate of return with RRSPs, etc than your mortgage rate costs you.

[RiverRat]

If possible, try to get 10% down. With 5% down, your downpayment is almost entirely insurance expense, throw in 5% realtor fees and other costs for selling, and well, it might very well take 3+ years before you can sell your place and not expect to lose money compared to just renting a place with nearly the same monthly cost. On a $300k purchase, the difference in CMHC fees between 5-10% down is about $4,500.00

Some tricks to boosting your downpayment and mortgageablity:

- If you have less than 20k in your RRSP, contribute the missing amount ASAP. You will be able to withdraw it, under the HBP, after 90 days (Make sure your possession date is later than 90 days away from whenever the money went in). Consider even taking out an RRSP loan to achieve this. You will have to repay the loan before getting the mortgage, but depending on your income, you might be able to coax 3 to 7 thousand dollars of extra tax savings that can be put down on a place.

- Plan to sell your car if you have a car loan. Add the money to your downpayment, and then rebuy a cheaper car or get dealer financing after you get your mortgage. It is easier to get a car loan with a large mortgage, than it is to get a large mortgage with a car loan.

- See if your realtor knows any tricks for coaxing downpayment cash out of a deal. Rather than reducing their price, the seller may agree to provide a "cash-for-repairs" allowance. Write it into the offer, and they can forward this amount to your lawyer, and it gets added to your downpayment. Many sellers probably won't go for this, and it may not even be strictly legal, but i've heard of stuff like this happening, and it's worth a shot.

Also, I really like the following website for doing home purchase analysis:

http://www.canadamortgage.com/

They have a series of mortgage calculators (see drop down on top right side of screen). The "Finance your purchase" calculator will give you a good estimate as to how much money the banks will lend you. Also the rate they show as "their best rate", is a pretty good indicator of the interest rate you should expect to get for your mortgage if you shop around.

The rent vs own calculator is a real eye opener. It takes interest and ownership vs rent expenses and tells you how much your house has to increase in value in order for ownership to be a financially more viable option then renting.

[CalgaryRealtor]

JohnnyC -

If you haven't gotten i touch with a mortgage broker yet (do NOT use a bank or credit union .... most will charge you at least 100 basis points more for the same mortgage product), get in touch with me and I'll set you up.

Some of the information above is just plain incorrect. Depending on your credit history and current income, you can buy a principal residence (a place you intend to live yourself) for as little as 5% down, or even finance it 100% *at a higher mortgage rate*. The premium for taking a high-ratio mortgage is always added onto the mortgage, and ranges from less than 1% (at 75%) to 2.75% (at 95% financing). Hardly the hit that some would have you believe.

Prices continue to rise in Calgary - house prices are up almost 16% since the end of December ... and there's likely another 5-10% coming before summer *April & May are always the strongest months for Calgary Real Estate* see http://www.jimsparrow.com/market-stats.php

To purchase a $250K condo *the avg Calgary condo now costs just under $310K* at 5% down you'll require $12.5K cash and your mortgage will cost you about $1,465/mth.
See: http://www.jimsparrow.com/mortgage-rates.php

[Rusty van Reddick]

you can only do the RRSP transfer ONCE in your lifetime and only for a FIRST home purchase. You do not have to repay before you get your mortgage- you have 15 years to repay. But those "repayments" are amortized to be an equal amount per year for each of those 15 years; you cannot, say, take 10k out of your RRSP and then sock 10k back into it the next year and think that you're even. Only 1/15 of the 10k counts as "repayment." I don't know why this works this way, but it does.

[Calgarian]

Thanks guys,

I was more curious how much money i am going to need to save up so I can stop living in apartments and giving my money to someone else.

[Champion3]

...and if you go with a long term mortgage, you'll be giving it all to your bank instead.

[The_Bachelor]

I would just add that you should definitely use a mortgage broker. They do all the work of shopping your mortgage around to the banks for the lowest bidder and you don't pay them a dime, the bank actually pays their fee for bringing them the business. Also the mortgage broker is on your side, it's nice to have someone pushing hard at the bank to get your application through because if it falls through they don't get their commission.

Just my experience, being 22 when I bought a house it helped reduce the stress of it all.