Buying a home is an exciting time, but it can also be a stressful one. One of the biggest hurdles to home ownership is coming up with the down payment. Fortunately, the Canadian Mortgage and Housing Corporation (CMHC) offers a program called the Flex Down Mortgage, which allows home buyers to borrow the down payment and use non-traditional sources for the down payment.
The CMHC Flex Down Mortgage program is designed to help home buyers who have good credit, steady income, and can afford the mortgage payments, but are struggling to come up with the down payment. The program allows borrowers to borrow up to 5% of the purchase price of the home for the down payment. This can be done by taking out a personal loan, using a line of credit, or using a credit card. The borrowed amount is then added to the mortgage, and the borrower is required to pay back both the mortgage and the borrowed amount over the term of the mortgage.
One of the biggest advantages of the Flex Down Mortgage program is that it allows home buyers to use non-traditional sources for their down payment. This means that the down payment can come from sources other than the borrower’s savings account or investments. Non-traditional sources can include gifts from family members, a loan from an employer, or even a government grant.
However, it is important to note that there are some restrictions on the use of non-traditional sources for the down payment. For example, if the down payment comes from a gift, the gift must come from an immediate family member, such as a parent, grandparent, sibling, or child. The gift must also be a true gift, and not a loan that must be paid back.
In addition, borrowers who use non-traditional sources for their down payment may be required to pay higher mortgage insurance premiums. Mortgage insurance is required for borrowers who have a down payment of less than 20% of the purchase price of the home. The amount of the mortgage insurance premium is based on the size of the down payment and the purchase price of the home. Borrowers who use non-traditional sources for their down payment may be required to pay a higher premium, as they are considered to be higher-risk borrowers.
Another important thing to note about the CMHC Flex Down Mortgage program is that it is only available for primary residences. It cannot be used for rental properties or second homes.
In summary, the CMHC Flex Down Mortgage program is a great option for home buyers who are struggling to come up with the down payment for their home. It allows borrowers to borrow the down payment and use non-traditional sources for the down payment. However, borrowers should be aware of the restrictions on the use of non-traditional sources and the potential for higher mortgage insurance premiums. As with any mortgage program, it is important to do your research and speak with a mortgage professional to determine if the CMHC Flex Down Mortgage program is right for you.