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January 17, 2022

Should you ever buy a house with $0 down?

It’s always been said, in sound financial reasoning, that you shouldn’t buy a home unless you have at least 20 per cent of its value ready for a down payment.

1150486_property_for_sale_2 Of course, there’s a reason the world plunged itself into a crippling recession for two years: we ain’t that smart with our money. Even as we recover from the downturn, real estate signs are once again everywhere telling you, the consumer, that you can buy this house with “no money down.”

Should you? Probably not, but is there at least an argument to be made? Should you ever, under any circumstances, buy a house with $0 down?

Certainly, the perils of such high-risk spending are well documented. Sites all over the ‘net lay out just what can happen for undertaking an entire home’s worth of debt.

But if it has to be done, if you’ve got to move forward with a no-money-down approach to buying a house, the Star’s Mark Weisleder offered a few tips recently for how to do it:

1) Get your credit right: Before applying for a mortgage, he advises, pay off or reduce all your outstanding credit card debt. Also, avoid changing jobs just before you apply (doing so could show a lender that you have an unstable employment history).

2) Set some money aside, anyway: To obtain a qualified mortgage, which requires you put down five per cent (not zero, but still) of the home’s value, many lenders want to make sure you’ve got not just enough to cover your monthly mortgage payments, yet also cash lying around to cover any household expenses that pop up. So, when you’re doing your mortgage budget, plan to need a little extra on top of those required payments each month.

Weisleder goes on to say more, though it appears even he might not buy into his own advice.

In any case, do you think you should ever buy a house with no money down?

By Jason Buckland, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

James HaversJames Havers

James is the senior editor of MSN Money living in Toronto. He has worked for the Nikkei Shimbun (Tokyo),,, Canadian Business and other publications. Havers turned to journalism after teaching overseas.

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...