“But, Peggy, I don’t have enough for a down payment!” That’s one of the most common concerns everyone at The Peggy Hill Team has heard over the years. It’s just part of the territory when working with so many first-time buyers, especially when you consider the prices of homes in the market today.
Fortunately, there are resources to help you come up with the needed funds, possibly even sooner than you hoped. If you’ve got homeownership in your sights, here are some programs that could be of assistance.
Planning to get out of the rental cycle and wondering where to start? You’ll get even more creative ideas in 6 Innovative Ways First-Time Homebuyers Can Beat The Tough Market.
Affordable Homeownership Program of Simcoe County
If you’re tired of renting, Simcoe County might be able to help! The Affordable Homeownership Program offers 10% toward your down payment, which could be the boost you need to start your search.
It’s a win-win situation for the county. You get the home you’ve always wanted to own, and rental units free up for other tenants. The program also creates demand for reasonably-priced homes and gives developers incentive to build.
Any Simcoe Country resident currently renting and who does not own property is welcome to apply. If you are approved, the funds will be paid directly to your lawyer’s trust account upon your closing date.
Best of all, it’s a forgivable loan if you remain in the home for 20 years and do not refinance for an amount exceeding your original mortgage. There are sometimes wait lists due to the popularity of the program, but keep checking back for further updates.
When you’re ready to take the next step, the posts below can help you plan:
- Buying a Home in Simcoe County? Here’s Why Buyers Love The Peggy Hill Team
- Exploring New Opportunities in Barrie Real Estate
First Home Savings Account
Start saving early, because the First Home Savings Account (FHSA) offers significant tax advantages! You can contribute up to $8,000 each year for 15 years to a $40,000 lifetime maximum. All dividends earned during that time are tax free. When you withdraw the funds to make a qualifying purchase, those funds are also tax free.
FHSA contribution limits are capped, but there is still some flexibility. If you only contribute $6,000 one year, you can add the remaining $2,000 to the following calendar year.
Wondering what homes are available in Barrie and the surrounding areas? Find out by browsing our featured listings.
Home Buyers’ Plan
The Home Buyers’ plan allows first-time home buyers to withdraw up to $60,000 from their RRSPs for use toward a down payment or closing costs on the purchase of a home.
Repayment is required within 15 years, but you have up to two years after purchase to begin. In the meantime, you can start enjoying life as a homeowner!
Gifted Down Payment
Also known as “The Bank of Mom and Dad,” a gifted down payment from someone who wants to help can allow you to realize your homeownership dream.
To qualify for a loan, these funds must meet some criteria:
It must be from an immediate family member, like your mom, dad, or brother or sister. Windfalls from a rich relative, friend or employer don’t count. The gift-giver must also sign a gift letter saying it is a gift, not a loan, and therefore does not require repayment.
Do you want to know more about assisting your child when it comes to real estate? Here’s How to Help Your Child Buy a Home.
Borrowed Down Payment
With extreme caution, you can borrow funds for your down payment from an unsecured line of credit. However, remember that your overall debt load can affect your ability to qualify for a mortgage.
For example, if you borrow $30,000 from a line of credit, your lender will factor it in before authorizing you for the final amount. Most people using this option are topping up their down payment rather than borrowing the entire amount.
Consider a High-Ratio Mortgage
Many clients believe that a full 20% down payment is necessary before buying a home. That means you would need $100,000 upfront just for a $500,000 condo!
There are definite advantages to paying the higher amount whenever possible. If you can cover 20%, you can obtain a low-ratio mortgage, which saves you from paying mortgage insurance.
However, you can get into the market with as little as 5% down if you qualify for a high-ratio mortgage. The total amount of your down payment will vary based on the purchase price. For a $500,000 home, you could get into the market with as little as $25,000, plus closing costs.
The path to homeownership comes with its fair share of challenges, but with the right support and access to resources, you could be closer than you realize!
If you have questions about how you can purchase your first home, call us at 1.705.739.4455, email us at info@peggyhill.com or fill out the form below. We are excited to help you achieve this milestone!
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