Can You Borrow Your Down Payment?

If you’re ready to buy a home but haven’t saved up the down payment, you might be wondering if there’s a way around it. In some cases, yes—you can borrow your down payment. But there are a few things you’ll need to know before going that route.

Nova Scotia Down Payment Assistance Program (DPAP)

The Nova Scotia Down Payment Assistance Program (DPAP) is designed to help first-time home buyers who have strong income and credit but haven’t been able to save up the full 5% down.

Here’s how it works:

• The province lends you the 5% down payment as an interest-free loan

• Repay over 10 years

• You must be a first-time buyer purchasing a primary residence under a set price limit

• You still need to cover your own closing costs and qualify for the mortgage using standard criteria

Most lenders accept DPAP as a valid down payment source—as long as your application meets all other lending requirements.

Keep in mind: When your down payment is borrowed, the default insurance premium increases to 4.50%, compared to 4.00% with traditional savings.

[Click here to see if you qualify for the Down Payment Assistance Program]

Borrowed Down Payment From a Credit Union

Some local credit unions offer programs that let you borrow the down payment directly. This could be through a loan, line of credit, or even a product bundled into your mortgage.

Here’s what to know:

• You’ll need strong credit and stable income

• The monthly payment on the borrowed funds is included in your debt-to-income ratios

• The insurance premium is 4.50% due to the increased risk

• Not every lender offers these products—but they’re available through certain credit unions in the province

These programs can help buyers who are ready to own but haven’t had time to build up savings.

Things to Consider

Borrowing your down payment can help you get into the market faster, but there are a few trade-offs:

• You’ll qualify for less, since the loan repayment affects your ratios

• You’ll pay a higher insurance premium

• You’ll take on more debt and start with less equity

• You still need to cover closing costs out of pocket

That said, for the right buyer, these programs can make homeownership possible when saving up 5% just isn’t realistic.

FAQ

Do most lenders allow borrowed down payments?
Yes, including programs like DPAP—so long as you meet all other lending guidelines.

Is the insurance premium always higher?
Yes. When the down payment is borrowed, the premium increases to 4.50%.

Can I use a line of credit for my down payment?
Some lenders allow it, but you must show you can carry the monthly payment.

Does borrowing my down payment affect my max purchase price?
Yes. The loan payment is factored into your debt service ratios, which can lower your qualifying amount.

Final Thoughts

Borrowed down payment options aren’t for everyone—but if your credit and income are solid, and saving up is the only thing holding you back, it’s worth looking into. Whether it’s through DPAP or a local credit union, there may be more flexibility than you think.

[Click here if you want to explore your down payment options]