What is a Flex-Down Mortgage?
A Flex-Down Mortgage is a mortgage product that has a flexible down payment amount. There is still a down-payment required, but it will vary based on the property value.
- For a property valued under than or equal to $500,000, 5% down payment is required (sources available below)
- For a property valued at greater than $500,000 and less than $1,000,000 –5% down payment is required up to $500,000 with an additional 10% down payment on the portion of the home value above $500,000.
Flex-down mortgages can only be on first mortgages, not second or third or used in refinance situations. As noted above, the total property value has to be less than $1,000,000. This type of mortgage will also have insurance included with it—the premium will be lesser of the premium as a % of the total new loan amount or the premium as a % of the top-up portion additional loan based on the rates at that time.
Those that choose to go with this type of mortgage product will have to meet requirements, just like any other mortgage. There are a few specifications with this product:
- You must show that you have standard income and employment verification papers
- A credit score of 650 or higher is highly recommended
- You must have no previous bankruptcies
- Some lenders may still require you to have some of the down payment from your own resources
Those considering this type of mortgage are recommended to have very little debt and be able to accommodate the additional cost of higher mortgage insurance (due to the higher risk to the lender on this type of mortgage). Typically, the insurance premium would be 0.2% higher on a flex down mortgage.