Overview
No down payment home loans in Canada are not directly available through traditional banks, as Canadian law requires a minimum down payment of 5%. However, there are legitimate strategies and government programs that allow homebuyers to effectively purchase a home without having personal savings for a down payment, typically by borrowing the down payment from another source or accessing special assistance programs.
How No Down Payment Mortgages Work in Canada
- Traditional lenders (major banks and trust companies) require at least 5% down on the first $500,000 of a home’s price, and 10% on the portion above that.
- Zero down payment mortgages (where the lender finances 100% of the purchase) are not legal in Canada since 2008.
- Workaround: You can borrow your down payment from a separate lender (not from your mortgage provider), such as through a personal loan, line of credit, or special credit union product. The mortgage itself still requires a down payment, but it does not have to come from your own savings.
Common Strategies to Buy With No Savings
- Borrowed Down Payment: Arrange a personal loan or line of credit for the minimum down payment.
- First-Time Home Buyer Incentives: Use government programs to supplement or provide your down payment, such as the Home Buyers’ Plan (RRSP withdrawal) or regional down payment assistance programs.
- Cash-back Mortgages: Some lenders offer cash-back upon closing that can effectively offset your down payment.
Provincial Programs and Variations
Nova Scotia Example
- The Down Payment Assistance Program (DPAP) in Nova Scotia offers an interest-free loan up to 5% of the purchase price, repayable over 10 years, for eligible first-time buyers.
- Eligibility includes being a resident, household income limits, credit score of 650+, and purchase price caps (e.g., $570,000 in Halifax).
CUA (Credit Union Atlantic) No Down Payment Mortgage
- Available in Nova Scotia, lets you borrow the 5% down payment as a loan or line of credit.
- Option for 5% cash back to help repay the borrowed amount.
Major Bank Offerings
- Major banks (RBC, TD, BMO, etc.) do not offer true zero down payment mortgages.
- Most banks offer low down payment options (minimum 5%) and may provide advice on using RRSP withdrawals or provincial programs.
- Some banks and credit unions offer cash-back mortgages, but these are not strictly zero down payment solutions.
Comparison Table: No Down Payment Options in Canada
| Solution Type | Down Payment Source | Typical Lender | Key Requirements | Where Available |
|---|
| Borrowed Down Payment | Personal loan/LOC | Alternative lenders | Good credit, stable income | Nationwide (varies) |
| Cash-Back Mortgage | Mortgage lender (cash back) | Select lenders/CUs | Higher interest rates | Select provinces/credit unions |
| Provincial Assistance Program | Government loan/grant | Provincial gov’t | First-time buyer, income cap | Provinces (e.g., NS, BC) |
| RRSP Home Buyers’ Plan | Own RRSP savings | Federal program | First-time buyer, RRSP funds | Nationwide |
Key Considerations
- Borrowing for your down payment increases your total debt load, which can affect your ability to qualify for a mortgage and may result in higher monthly payments.
- Alternative lenders (non-bank, credit unions) are often required for these no down payment strategies.
- Interest rates for borrowed funds or cash-back mortgages are typically higher.
- Government programs have strict eligibility criteria (income, property price, residency).
Actionable Next Steps & Recommendations
- Assess your credit and affordability: Ensure your credit score and debt ratios meet lender requirements.
- Explore provincial and federal programs: Check for down payment assistance in your province, and consider the RRSP Home Buyers’ Plan if eligible.
- Compare lender options: Use platforms like theratefinder to compare rates and products from top Canadian lenders, including alternative and credit union options.
- Start your application: For a personalized solution and to find the best no down payment or low down payment mortgage, begin your application at theratefinder.ca/onboarding.
Summary
While true zero down payment mortgages are not directly available from major Canadian banks, you can still purchase a home without personal savings for a down payment by borrowing the funds or using government assistance. These options come with additional risks and requirements, so careful consideration and comparison of options is crucial. For the most comprehensive comparison and access to competitive rates from top lenders, start your application with theratefinder for expert guidance tailored to your situation.