High On Hopes? Short on the Down Payment? This may be for You - Summer 2005

Been dreaming of owning a home? Think you can't afford it? You're not alone.

A few of us are fortunate enough to have family willing and able to pay for our down payment. A few more are supreme money-managers and have easily saved the five or ten per cent down payment required. For most of us, the down payment is not as easy to come by as it may seem.

Well keep reading, because funding the down-payment just got easier - providing you have good credit and sufficient income to pay your monthly home costs. The Canadian Mortgage and Housing Corporation (CMHC) recently introduced a new buying option called Flex Down.

	With Flex Down, buyers can obtain money for their down payment from a wide range of sources, such as:
			Gifts from friends, parents or other family members;
			Cash-back incentives from their bank, financial institution or
			other mortgage lender;
			Money borrowed from personal loans, credit cards or lines of
			credit;
			"Sweat equity", referring to the value of the buyer's labour to
			help build their home.

Keep in mind the funds for the down payment must be at arm's length and not tied to the purchase or sale of the house.

Is Flex Down Right For You?

To qualify for the Flex Down option, you must have a history of good debt management and a good credit history.

Flex Down is the most expensive of all buying options because you'll have higher premiums with this option than any other. This means you'll have less disposable income each month for other home expenses. You'll also forego the ability to negotiate lower mortgage rates.

	On the plus side, Flex Down does allow you much of the same flexibility available in other buying options, such as:
			The option to borrow up to 1.5% of the purchase price to cover
			closing costs;
			Choice of fixed, adjustable or capped variable interest rates;
			and
			Interest terms as short as six months.

Since CMHC introduced Flex Down in 2004, the majority of home buyers choosing this option are young people fresh out of school and struggling to pay off student loans. Flex Down may be a great solution for this type of buyer - one who doesn't have a great deal of cash on hand to apply to a down-payment. Experts urge buyers to be conservative when choosing their price-range and home size.

For more information or to start a home-buyer's plan of your own, visit us online at www.ricefinancial.com or call your Rice Financial advisor today.