No Down Payment Mortgages in Ontario

No Down Payment Mortgages in Ontario,mortgage brokers in Toronto

In most cases, the dreaded down payments keep young Canadians from purchasing their first homes for many years. With the home prices rising in Ontario, even 5% of the home purchase price is often a significant number than most Canadians are comfortable with. This is the primary reason you should explore the possibility of getting no down payment mortgages in Ontario.

Here’s everything you should know about no down payment mortgages in Ontario.

Do no down payment mortgages in Ontario exist?

Buying a home with no down payment does not mean that you don’t make a down payment. It means that you are not using your saved cash to make the down payment. Instead, you are going to borrow the amount required for a down payment (about 5% of the home price). This means you are taking more debt than a homebuyer who chooses to make a down payment. For this reason, you must be in good financial standing before you try to take more debt than necessary.

How do ‘no down payment’ mortgages work?

No down payment mortgages work the same as regular mortgages, and no money is expected at the closing. The money you will need is the amount required to cover the standard closing expenses. Your down payment and mortgage will be fully funded by your lender.

Unfortunately, the government doesn’t allow people to borrow their down payment from their lender if the lender is a federal trust company or a bank. As such, you will have to find an alternative lender for your down payment. Suppose you get an alternative lender and secure the financing required for your down payment. In that case, you will be making regular payments to the alternative lender, like you would the federal trust company or bank for your mortgage.

Types of loans for a down payment

If you don’t want or you are unable to save for a down payment, there are different ways you can get the amount required for the down payment. These include;

  • Personal loan
  • Line of credit
  • Credit card
  • Government programs such as First Time Home Buyer Incentive
  • Borrowing from a close family member

Benefits and limitations of borrowing for a down payment

Keep in mind that borrowing money for a down payment has both advantages and disadvantages.


No more renting: It can take several years of saving before you get enough cash for a down payment on your dream home. Borrowing that amount allows you to start the home buying process and a chance to build equity.

Avoid mortgage default insurance: If you make a down payment that’s less than 20% of the home price, you will be obliged to buy mortgage default insurance which could cost you thousands of dollars. If you borrow the total amount of down payment required, you won’t need the mortgage default insurance.

Increase your wealth: A home is considered a significant asset for an investor. The earlier you buy a home, the more equity you will build, and this is a significant step in terms of growing your wealth.


  • Placing a down payment of 20% prevents you from owning more than your home is worth if house prices fall.
  • If you want to access HELOC and you have borrowed 20% (for a down payment), you may not have enough equity because many lenders require a house to have at least 20 percent equity.
  • Borrowing a down payment means taking more debt.
  • If you borrow money from a family member and fail to pay it, you will be risking your relations with your family.

Improve your chances of getting approved for no down payment mortgages in Ontario

debt counselling, No Down Payment Mortgages in Ontario

Getting approved for no down payment mortgages in Ontario can be a challenge. Fortunately, there are some factors you can address to improve the chances of getting approved. These include;

  1. Credit score

Although every lender has a set of criteria, most lenders require you to have a good credit score. That means you need a credit score of 650 or more. Also, you must ensure that all bill payments are made on time to ensure you have an outstanding credit report and credit score.

  • Employment

There are many things that lenders evaluate when assessing your employment. For instance, they check how much you earn compared to what you borrow, the stability of your job, how long you have been employed, and if you have a drop in your income, you can stim make the necessary payments.

  • Closing costs

Closing costs or expenses are usually paid for in cash. Often, these costs amount to 1% to 2% of the home purchase price. That means you must have enough cash to address these expenses even if you qualify for no down payment mortgages in Ontario.

Final thoughts

If you are unable to save enough money for a down payment on a house purchase, it’s time to look into the possibility of buying a home with no down payment. An experienced mortgage broker or real estate agent can help you evaluate the available options and take all appropriate steps before applying for no down payment mortgages in Ontario.

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