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How To Buy A Home When You Don’t Have The Downpayment

Let Us Show You How The Numbers Make “Cents”


Although BANKS are not offering 100% financing anymore Credit Unions still are. This is done by doing the typical 95% Loan to Value financing but giving 5% cash back that can be used as the 5% down needed. (Just a heads up though, you will need good credit and a decent job).

Yes, your rate will be higher but that’s because you’re basically paying back the 5% over the 5 year term of the mortgage. Current rates for this are around 4.85% which means that if you buy your first home for $300,000, got 5% cash back ($15,000) you would be paying about $10,000 in interest on that $15,000. This may sound like a lot (and it may scare uneducated buyers off) however it doesn’t compare to the $60,000 you’d waste in rent over the next 5 years ($1000/mo X 60 months) PLUS the $47,000 in appreciation you’d also miss out on over the next 5 years ($300,000 X 3% appreciation compounding over 5 years).

Even taking into consideration the interest you’ll pay over these same 5 years, you’re still WELL ahead, see below:

Eliminated Rent Payments: $60,000
Appreciation of Home: $47,000
Total: $107,000

Total Mortgage: $285,000
Interest Rate: 4.8%
Total Interest over 5 Years: $63,475.17

Total “Home Owner Money Earned”: $107,000
Minus Interest Paid: $ 63,475.17
Total Ahead for Buying NOW: $43,524.83

PLUS Principal Pay down: $33,553.24
Total Money in YOUR Pocket: $77,078.07

The Golden Rule of owning Real Estate is: “Never Wait to Buy Real Estate……Buy Real Estate and Wait”.

In the long run, you simply can’t lose.

About the author...

Here to help inform, educate and represent you in the home financing process.

View all posts by James Loewen

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