Canada bans zero money down mortgages, amortization periods longer than 35 years

[Jhhnn]

Originally posted by: charrison
I think this is quite unfortunate. While zero down home loans do carry more risk, but they still should be allowed for individuals that have enough credit/income to handle it.

For those with good income/credit they can get into a house sooner and not have to pay rent while trying to save 20% to get into a house. But I will say such loans should be given out quite selectively.

5% does not equal 20%.

Individuals with enough credit/income to actually afford a house recognize that saving/investing to create a decent downpayment is prudent, and also lowers their monthly payment over the next 30 years or so.

Dunno about Canada, but in most of the US, there's sufficient differential between rent and house payments to allow potential home buyers room to save a minimal downpayment in a relatively short period of time. If they can't manage to do that, it seems unlikely they'll be able to afford the house payment.

 

[charrison]

Originally posted by: Jhhnn

Originally posted by: charrison
I think this is quite unfortunate. While zero down home loans do carry more risk, but they still should be allowed for individuals that have enough credit/income to handle it.

For those with good income/credit they can get into a house sooner and not have to pay rent while trying to save 20% to get into a house. But I will say such loans should be given out quite selectively.

5% does not equal 20%.

Individuals with enough credit/income to actually afford a house recognize that saving/investing to create a decent downpayment is prudent, and also lowers their monthly payment over the next 30 years or so.

Dunno about Canada, but in most of the US, there's sufficient differential between rent and house payments to allow potential home buyers room to save a minimal downpayment in a relatively short period of time. If they can't manage to do that, it seems unlikely they'll be able to afford the house payment.

And the risk difference between 5% and 0% is not much. When we purchased our house 6 years ago, we had been socking away money into 401ks, so we did not have a lot of liquid savings. A zero down loan allowed us to get a house much sooner and save us money as we did not have to continue to pay rent while saving the money. It is not a loan that should be done away with, but it should be given out carefully.