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Mortgages now available with no money down



Five per cent payment no longer required by CMHC

The Canadian Mortgage and Housing Corporation announced a new twist this week as part of a program to encourage Canadians to buy their first homes. Starting March 1, the CMHC is dropping a requirement that first-time buyers have to make a five per cent minimum down payment on a home in order to qualify.

Now Canadians with good salaries and credit but not much in the bank can qualify for CMHC backing without any kind of down payment – providing they prove they can make their payments.

The announcement comes less than six months after the CMHC removed its cap of $300,000 on mortgages in order to keep up with the rising price of homes in cities like Vancouver and Toronto. They also made it possible to qualify for CMHC backing on second home purchases.

Tim Wake, the general manager of the Whistler Housing Authority, says the decision to do away with the five per cent requirement could help residents to buy into the employee restricted housing – recognizing that market housing is priced out of range of most locals.

"In a word, it’s going to make it easier for people," said Wake. "It gives them a few more options for their first purchase especially. I presume this will make it easier for people to pre-qualify for a mortgage and get on our list, and that’s a good thing.

"You still have to pre-qualify and show that if you’re borrowing that money you can pay it back plus pay back your mortgage, so it gives people more options, but in the end you still have to be able to support the debt."

Wake doesn’t know if the new rule change will result in a longer list to buy Whistler Housing Authority properties.

"The list is growing. Is it going to grow more because of this? I don’t know, but we have people coming in every day," said Wake.

The list of pre-qualified applicants on the WHA list has grown from about 200 in June to about 370.

"We got up to 300 people before that and we figured the waiting list was two years. When the Bear Ridge development came along, that was a hundred units and we pretty much went through the whole list," said Wake. "When we do our annual update in June or July, a lot of people drop off the list so it’s difficult to say.

"If we don’t have a sizeable new project like Bear Ridge, then it’s going to take a few years."

Most of the feedback has been positive, but in places like Vancouver where there is a limited number of affordable properties available, some critics believe that the CMHC rule changes will create more competition and raise the price of houses. There is also some concern that the new rule change will encourage people to go into debt before they’re ready.

The CMHC doesn’t provide mortgages, but insures mortgages for Canadians and banks. If someone who qualifies defaults on their payments, the CMHC takes over until the house can be sold.

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