Buying a Home in Canada with No Down Payment

Posted on Jul 02, 2025


Buying a home without a traditional down payment might sound impossible, but in Canada there are a few legitimate paths that can make it happen. Whether you're a first-time buyer or looking for creative financing solutions, here are several ways to enter the housing market with little or no money upfront.

Private Lenders
Private lenders typically offer more flexible terms than traditional banks, including the possibility of zero-down financing. These lenders may work with clients who have: 

  • Unconventional income (e.g., self-employed)
  • Credit challenges
  • Limited savings
However, there are trade-offs. Interest rates from private lenders are usually 2–4% higher, terms are shorter (often 1–3 years), and lender fees may apply. For buyers who don’t meet bank criteria, this option can be a helpful stepping stone into homeownership. 

Vendor Take-Back (VTB) Mortgages
In a Vendor Take-Back mortgage, the seller of the home finances part or all of your purchase. This means the seller essentially becomes your lender, allowing you to buy the home with little or no down payment. These arrangements are particularly useful when traditional financing isn't available. They can offer: 

  • More flexible credit terms
  • Lower closing costs
  • Custom payment structures
While not common, VTB mortgages can be mutually beneficial, especially if the seller is motivated to close quickly. 

Rent-to-Own Agreements
Rent-to-own lets you lease a property with the option to buy it later. A portion of your monthly rent (typically 25–30%) goes toward your eventual down payment. Key benefits: 

  • Build equity while you rent
  • Lock in today’s home price for a future purchase (usually 1–3 years out)
  • Improve credit or finances while living in your future home
Some rent-to-own agreements may require an upfront option fee (2–5% of the purchase price), while others offer true zero-down structures. Be sure to read the contract carefully, as these deals can vary significantly. 

Leverage Equity from an Existing Property
If you already own a home, you might not need cash to buy your next one. Instead, you can access the equity in your current home through: 

  • Refinancing
  • Home Equity Line of Credit (HELOC)
If you have at least 20% equity, lenders may allow you to borrow up to 80% of your home’s value. That money can be used as a down payment on a second property. Just keep in mind: this strategy increases your debt load, so you’ll need to budget carefully to manage two mortgages (or one larger one).
Share