Flex down or borrowed down payment Mortgage Option
What is a Flex Down Mortgage Option
A flex down mortgage option is a great way to get into a primary residence without having the down payment saved up. If you have strong credit, over 650 with a clean credit history is one of the key qualifying factors. You can’t own other properties to qualify for this.
There are only a few lenders that still support this program and very few of them are National Banks so you may hear that it can’t be done at certain branch levels. With this program, you borrow the 5% down payment through a loan or line of credit separate of the mortgage. The remaining is a 95% best rate mortgage put on the property.
What is a Borrowed Loan
A borrowed loan or line of credit is a loan you pay off over time and are left with the standard mortgage. The cost on a program like this is not only the mortgage interest but also the borrowed funds cost. That being said, when we compare the mortgage and Line of Credit (LOC) payment to today’s current rental rates, it can be comparable or less than what a person is paying for in rent.
Therefore you get to own a property, pay comparable rent, have asset appreciation, and pay down the mortgage instead of paying rent. It’s a great product and option for those that don’t quite have the full down payment saved up.