How to Buy a Home with No Down Payment

For many aspiring homeowners, saving enough for a down payment can feel like an overwhelming, sometimes impossible, challenge. Have you ever wondered, “Can I buy a home with no down payment?” What if we told you that buying a home with no down payment is not only a possibility but a reality? Before we dig in, let’s clarify that, technically, the down payment isn’t exactly non-existent; it just comes from other sources. Here are some methods and strategies to help you achieve home ownership without a traditional down payment.

The short answer is, technically, no, but practically speaking, yes—with the right strategy.

In Canada, traditional mortgages from major lenders require at least a 5 percent down payment on the first $500,000 of your home’s purchase price and 10 percent on any portion above that. However, while you can’t walk into a bank empty-handed and ask them to finance 100% of your home purchase, there are legitimate ways to get a no down payment mortgage. These approaches don’t eliminate the down payment requirement—they just help you source the funds differently.

Traditional mortgages typically require a down payment ranging from five percent to 20 percent of the home’s purchase price. A no-down-payment mortgage is a home loan option that allows the borrower to finance a property’s entire purchase price without needing a down payment. This allows homebuyers to finance 100 percent of the property’s value.

Since the entire purchase price is financed, the loan amount will be higher than a traditional mortgage, where a down payment is provided. Due to the increased risk associated with lending such a high amount, lenders often impose stricter criteria, such as higher credit score requirements, proof of stable income, and lower debt-to-income ratios, to ensure the borrower can comfortably manage the loan repayments. Some lenders may also impose higher interest rates or additional fees.

Buyer beware: while buying a home with no down payment is possible, those who can’t save at least five percent of the purchase price should consider whether they are in a financial position to buy and carry the cost of home ownership. If they determine that now’s the right time to buy, here’s how to do it with zero down.

If you want to buy a home in Canada without a down payment, there are several avenues you can take. Here are the primary options available to Canadian homebuyers:

Canada Mortgage and Housing Corporation (CMHC) FlexDown Program – The CMHC offers insurance for high-ratio mortgages, which can allow for a lower down payment. The FlexDown Program allows you to borrow your down payment from sources like personal loans or lines of credit.

Local Government Programs – Some cities and provinces across the country offer down payment assistance. The eligibility requirements vary by location, but many are specifically designed to help first-time buyers, essential workers, or those with moderate incomes achieve homeownership without the traditional upfront cash barrier.

Private lenders may offer more flexible terms than traditional banks. They can provide loans that allow no down payment, although these often come with higher interest rates and more stringent conditions to mitigate the risk. Many private lenders are willing to take on higher-risk clients who may not meet the strict criteria set by major banks. These mortgage lenders typically cater to Canadians who don’t fit within the traditional lending box—perhaps you’re self-employed, have a unique income structure, or have credit challenges that make bank approvals difficult.

The convenience of home financing with no down payment through private lenders often comes at a premium—interest rates could be 2-4 percent higher than conventional mortgages, terms may be shorter (usually 1-3 years), and you might face notable lender fees. However, for some Canadians, these conditions are acceptable temporary solutions that allow them to enter the housing market sooner rather than waiting years to save a traditional down payment.

A Vendor Take Back mortgage involves the seller of the property offering financing to the buyer. In this arrangement, the seller loans you the money for the down payment, a portion of the mortgage or even all of it. This type of agreement is beneficial if the seller is keen to close the deal quickly or if traditional financing options are unavailable. VTBs are often more flexible regarding credit requirements and can sometimes be negotiated at competitive interest rates.

A rent-to-own arrangement allows you to rent a property with the option to purchase it later. During this period, a portion of your monthly payments (typically 25-30%) gets credited toward your future down payment, helping you build equity before you even own the home. Rent-to-own provides a stepping stone to conventional financing for those who can’t qualify for mortgage lenders’ no down payment programs due to credit issues or employment circumstances.

The beauty of rent-to-own with no down payment is that it allows you to lock in today’s purchase price while delaying the actual purchase for 1-3 years. However, while this option gives you time to save and build credit, it usually comes with higher monthly payments. Be aware that these arrangements vary widely in structure—some require an initial option fee (usually 2-5 percent of the purchase price), while others truly allow buying a house with no down payment at the start, though this arrangement is much rarer.

If you’re looking to buy a second home, you can tap into the equity of your first property. For homeowners with substantial equity, this approach can unlock access to no down payment home loans for subsequent property purchases without waiting years to save. Canadians with at least 20 percent equity in their current home often qualify to borrow up to 80 percent of their property’s value through a refinance or Home Equity Line of Credit (HELOC). By taking out a home equity loan or home equity line of credit, you can use the funds as your down payment for the new property. Remember that while you’re not using liquid savings for the down payment, you are increasing your overall debt load, so be careful when budgeting for both properties.

Achieving homeownership with no down payment may seem like a distant dream, but it can become a reality. Follow this step-by-step guide to begin your journey towards buying a home without a down payment:

Obtain a free credit report from one of Canada’s major credit bureaus (Equifax or TransUnion). Check for errors and discrepancies and take steps to correct them. Add up your monthly debt payments (loans, credit cards, etc.). Divide this figure by your gross monthly income to determine your debt-to-income ratio.

Look for traditional banks and private lenders offering no down payment options. Utilize online comparison tools and mortgage brokers to find competitive rates and terms. When comparing interest rates, fees, and repayment conditions, consider both the short-term and long-term financial implications.

Prepare financial documents such as bank statements, tax returns, and proof of income. Collect identification documents like your driver’s license and SIN card. Complete pre-approval forms for multiple lenders to increase your chances of finding the best deal. Compare the terms of each no down payment mortgage pre-approval offer, paying attention to any conditions or contingencies attached to the offers.

Look for a real estate agent experienced with no down payment purchases. Discuss contract terms, offers, and negotiation strategies with them. When determining your offer, factor in closing costs such as legal fees, title insurance, and land transfer taxes, which can range between 1.5 percent and 4 percent of the home’s purchase price.

Are you ready to take the next step toward home ownership? REMAX real estate agents have the knowledge and resources to help you navigate the home-buying journey.