Five Per-cent Down Payments are Still Possible
Investing in Edmonton's real estate market is relatively simple. For a small amount of money down, usually, five percent, (plus closing costs) and can own an asset worth significantly more and build your net worth. Your down payment must be from your own savings or a gift from a family member. You cannot use a loan or line of credit.
To use the 5% down payment option, the following rules apply:
- The home must be your principal residence - in other words, you will actually live in the home. So if you plan on buying a condominium or other property for residual income, you won’t be eligible for the Canada Mortgage and Housing Corporation’s 5% down payment option.
- To calculate your GDS or Gross Debt Service ratio, factor in your monthly mortgage payment, utility costs, property taxes and condo fees, if applicable. This number cannot exceed more than 32% of your gross taxable income. Plus, all your consumer debt, loans, and housing-related payments cannot exceed 40% of your gross taxable income—this is your Total Debt Service ratio or the TDS.
- Finally, you must have good credit and a minimum of one year with your current employer.
Keep in mind, as of January 1st, 2018, the government has imposed more qualifying restrictions on Canadians and you must now qualify at two-per-cent higher interest than your current rate. Once you have your pre-approval completed. Contact an experienced real estate agent with their ABR designation and start house shopping!