No Down Payment, No Problem... Flex Down!

"What if I don't have a large enough down payment saved up?"

This is one of the most common questions I'm asked as a mortgage broker, and probably always will be. With real estate prices at all-time highs in many markets, the government-mandated minimum 5% down payment may not always be readily attainable or reasonable for every buyerr. For those who are ready to take the plunge into real estate, but haven't quite saved up the down payment, there may be another option.

Flex Down is a mortgage program through which you can borrow all or a portion of the required 5% minimum down payment.While this might seem like a dream come true, it also comes with some very strict guidelines that should be considered before deciding if it's right for you.

Your Qualifications

Wanted: Clients with excellent credit, stable, fully-qualified income, and little to no existing debt.

Do you fit the profile? If so, then flex down might be an awesome option to allow you to buy your home sooner you think. If the last thing holding you back is the challenge of saving up your down payment, then this program will let you use borrowed funds to make up the remainder.

You should have several years history of utilizing your credit carefully and with no blemishes or missed payments. If you make your payments regularly and don't max out your available credit, then you will probably qualify. Your income should also be easily verified and stable. 2 years of employment is preferred, but not always required, and you should have consistent/demonstrated hours and pay to have the best chance for approval. Finally, you should have most or all of your existing debts paid off or minimized. The less existing debt you have, the more likely you are to have room for payments on the amount you're about to borrow.

Your Lender's(and Mortgage Broker's) Qualifications

The Flex Down program is not offered by all lenders, but we have access to several lenders who offer this program. Make sure your chosen mortgage professional has experience in this unique program and has the right connections with their lenders to make this work for you as effectively as possible (Hint: I do. Contact me HERE for more info). Choosing someone without this valuable knowledge and experience could mean a very difficult time getting you an approval! This is a program that not all mortgage brokers/banks are familiar with; make sure you take your time and ask lots of questions.

Don't Forget The Mortgage Insurance!

As with all "High-Ratio" mortgages (less than 20% down ), your mortgage must be insured by one of the three mortgage insurers. The mortgage insurance premium is higher on the Flex Down program, and should be considered to make sure your benefits outweigh the extra cost. If you're interested in comparing the costs, give me a call and I am happy to update you on the most current rates and policies for comparison.

Making The Payments

One very important thing to remember when calculating whether this program will work for you is that the lender will require you to include your monthly repayments in your debt service ratios. This means that you must include 3% of your balance in your ratios. For example, if you borrow $20,000 you must include $600/month in your debt servicing.

While this lowers the total mortgage you are qualified for, it allows you to become a homeowner sooner. The best chance for approval with a Flex Down mortgage is for you to purchase a home well within your means, as opposed to the most expensive home possible. This not only encourages you to make good buying decisions now, but also leaves you some room for other purchases later, as you pay off the borrowed portion of your down payment.

Is It Right For You?

You've probably figured out by now that this program isn't for everyone. It is however, an open door for the right type of people to purchase and own their own home sooner rather than later. 

If you're thinking about making the plunge as a homeowner but aren't sure about your down payment(or anything else for that matter!), let's get together and see if this program is a good fit within your financial plan and goals. My consultations are ALWAYS FREE, so why wait? Give me a call at 250.682.0908 or Apply Online any time!