May Mortgage Update - Can you buy a second property with 5% down?

Can I purchase a second home with 5% down?

The short answer is yes.

Here's the rules and how it all works:

• Property has to be owner-occupied (the owner or their family is going to live in it at least part of the time). So for example, the client could buy a vacation property, a home for a grown up child, or they could flip their current house into a rental, and purchase a new house to live in.

• They would have to pay the mortgage insurance premium (which gets rolled into the mortgage). Remember 5% down is only for homes less than $500k. If the price of the next property is above $500,000, the minimum down payment is 5% of the first $500,000, and then 10% of the difference. For example, on a $600,000 house the minimum down payment is $35,000.

• You cannot buy a rental with 5% down payment. A rental needs to be 20% minimum.

• The deal needs to make sense to the insurer and the lender to avoid mortgage fraud. For example, if someone owns a million dollar home in Waterloo and they want to buy a $500k condo in downtown Kitchener, the insurer/lender is going to assume it's going to be a rental and turn down the deal. 

Credits and thank you to Jim Steffler for this information. If you’re looking for a great mortgage agent, consider reaching out to Jim!

Jim Steffler

Mortgage Agent Level 2

Dominion Lending Centres National Ltd.

TEL: 226-338-5136

EMAIL: jim@jimstefflermortgages.com

https://jimstefflermortgages.com