Have you been stalling your home-buying plans because your down payment savings aren't where they need to be? You’re not alone! The percentage of first-time homebuyers struggling with down payment climbed to 67% in 2023. That’s an increase from 62% in 2021 and 57% in 2019.
However, just because you haven't been able to save enough for the down payment doesn't mean your homeownership dream is over. There are many down payment assistance programs that can help you buy your dream home in Toronto. These programs offer financial assistance to homebuyers in the form of grants, loans, or forgivable loans. Using this, you can cover a portion of the down payment and closing costs of the MLS listing in Toronto.
So, if you've been struggling to save that last bit of cash for your down payment, take the help of these programs. Just make sure you're aware of the myths surrounding the down payment assistance programs before applying for one. This will help you to take full advantage of these programs without any unexpected surprises.
Common Misconceptions About Toronto's Down Payment Assistance Programs
MYTH #1 - They’re only for people buying an MLS listing in Toronto for the first time
True, there are many down payment assistance programs that are just for first-time homebuyers. However, there are also options available for those who have previously bought a home. For instance, let’s take the example of the RRSP Home Buyer’s Plan (HBP). With the help of this program, you can take up to $60,000 tax-free from your RRSP to use as a down payment on a new home. This RRSP plan has been designed mainly for first-time homebuyers. However, this program doesn’t completely shut out those who have bought homes in Toronto before.
According to the eligibility criteria of this plan, you can take advantage of this program even while buying your second or third home. But you shouldn’t have owned a home in Toronto in the last four years. Yes, it’s quite possible you might have bought an MLS listing in Toronto 4 years before. But due to a job change, or any other personal reasons, you must have sold the home and have been renting for around 4 years. In such a case, you can take the help of this down payment assistance program to buy another home.
MYTH #2 - You can’t qualify for the down payment assistance programs if you have debt
Almost everyone has the burden of student loans, car loans, or even credit card balances on their shoulders. This is why most down payment assistance programs usually don’t require you to be completely debt-free. Instead, they look at whether your income can support the mortgage payment on the MLS listing in Toronto, meaning your debt-to-income ratio.
MYTH #3 - These programs are eligible for only certain neighbourhoods or types of home
Not at all! Down payment assistance programs aim to support all homebuyers who are struggling to save enough for a down payment. Their goal is to make homeownership for all and any homebuyers. Hence, they keep their program eligibility criteria broad, including all the common property types and neighbourhoods. This means whether you’re looking at a condo in the downtown area or a single-family home in the suburban, you can qualify for these programs.
MYTH #4 - Only government agencies offer down payment assistance programs
Government programs are not your only option to get help while buying the Toronto MLS listing. In fact, there are also non-profit organizations that can help you buy your home just like government programs do. Non-profit organizations often have special down payment assistance programs that target specific homebuyers. They provide grants or low-interest loans that can make it easier for you to afford your down payment.
Mortgage lenders can also be a great option for getting help with your down payment. Some banks and financial institutions offer their own down payment assistance programs. These lenders might have different terms and requirements than government programs but they can still provide valuable help. You can check out these programs if you don’t qualify for a government program or need something more flexible.
MYTH # 5 - The down payment assistance programs are “too good to be true”
Usually, most of the down payment assistance programs are legitimate with clear terms and conditions. But yes, there are certain down payment programs with terms that are too good to be true. For instance, there are programs that promise to cover your entire down payment for the MLS listing in Toronto. However, they might charge you some hidden fees or trap you into a not-so-favourable rule like paying back the assistance in full within a year. These are the down payment assistance programs you must steer clear of.
So, before applying for a down payment assistance program, check their official site or take the help of a real estate agent. These professionals can help you understand how the program works, and what the requirements are. Also, they can inform you whether there are any fees you would need to pay.
MYTH # 6 - Receiving Down Payment Assistance Can Make It Difficult to Get a Loan
On the contrary, getting down payment assistance can actually help you qualify for a loan for buying an MLS listing in Toronto. Here’s how -
When you apply for a mortgage to buy a home, lenders will look at your financial situation. This includes your income, credit score, and the amount of money you can put upfront - the down payment. So, if you don’t have enough saved for a down payment, the lender might not give you the green light for the loan. If, on the other hand, your down payment amount is big, you’ll have to borrow less money, making you a more attractive borrower.
Let Down Payment Programs Guide You to the Home You've Always Dreamed Of
As you’ve seen, down payment assistance programs do not have as many stringent rules as the myths tell you. In fact, these programs are designed to help homebuyers, like you, easily buy an MLS listing in Toronto. So, if you’ve been struggling to save up for that down payment, take the help of these assistance programs and buy your dream home in Toronto now. The Bank of Canada just slashed interest rates for the fourth time in a row and home prices are on the rise. Delaying your homeownership any further might not work in your favour.
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