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HOME BUYERS GUIDE
A comprehensive guide
to home ownership presented by the "The House Team"
DOWN PAYMENT
If you have less than 25% down
payment, mortgage insurance is required as outlined on the previous page.
Homeowners no longer need the minimum 5% down payment from their own funds
to purchase a home. You can now use borrowed funds for your 5% down, but keep
in mind that there are higher credit criteria and your insurance premiums
increase.
Down payment from your
own resources (non borrowed):
You must supply verification
satisfactory to the lender of accumulated savings from non-borrowed funds.
This may be in the form of:
Copy of your bank statement
or bankbook (including cover) showing a minimum three-month history. Any
large deposits during this time period
must be explained and documented.
Copy of RRSP statement, term
deposits, CSBs, or other investments.
Down payment from a
gift (non borrowed):
All or part of the minimum equity
requirement (5% for down payment plus 1.5% for closing costs) may be provided
by way of a financial gift, as long as all of the following conditions are
met:
The donor is an immediate
relative of the borrower (recipient); and
The Approved Lender has verified
that the money is a genuine gift; and
The Approved Lender has verified
that the funds are in the borrower’s (recipient’s) possession
at least 15 days prior to closing.
The Approved Lender will verify
the authenticity of the gift by obtaining a written confirmation, signed by
the donor and the borrower (recipient), which will include the following points:
The money is a genuine gift
from the donor and does not ever have to be repaid;
No part of the financial gift
is being provided by any third party having any interest (direct or indirect)
in the sale of the subject property.
Borrowed down payment:
Effective March 1, 2004, homebuyers
can get their down payment from borrowed sources that include:
Lender cash back incentives;
Personal loans, lines of credit
or credit cards;
Unsubstantiated gifts.
When using a borrowed down payment,
there are a higher credit criteria and also increased insurance premiums.
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