Does being on a low income automatically prevent you from being able to buy your own home in Canada? While you might think that the answer is yes, or that it’s possible only by spending every last dollar you have, there are several ways that you can still afford to purchase a property in Canada on a low income:
Knowing which mortgage program to apply for:
A broker can help you select a mortgage program that will accept your application, and there are several options ranging from FHA and USDA loans, to VA and HomeReady loans. To know more about each of these options and any other that may be available to you, consult with a local mortgage specialist.
Qualifying for a low-income mortgage:
If the property you want to buy is in a qualified area and you’re below local income caps, or have a down payment of just 3.5% and a credit score of 580, some programs may qualify you for a mortgage, but you’ll need to consult with someone in the know to discover which mortgages are worth applying for under your specific financial circumstances.
Can the Canadian government help you buy a house?
You can apply for down payment assistance from the government in the form of a grant or low-interest loan, or buy a house using a government-backed mortgage such as FHA or USDA. When you participate in these programs, the government are insuring your loan so that you can still buy a property on a low-income.
What is a lease option or ‘rent-to-own home’?
Typically, you’ll rent a property at a higher rate for a set period of time, and that excess rent will be put towards a down payment when you go on to buy the house at a later date. This option might help you purchase a property if you’re currently short of cash, but it does require seller cooperation and can have some unique and not insignificant risks.
Are grants available to help you buy a house?
Known as ‘down payment assistance’ grants, these won’t help you pay for the whole house, but instead help you cover your down payment to make a mortgage more affordable for anyone on a low income, and living in what’s referred to as a ‘target area’.
While it might seem counter intuitive to pay for the services of a mortgage broker when you’re on a low income, the deals that they have access to could save you more money in the long run than any mortgage you find and apply for independently.