Last year, several Real Estate Agents, and other promoters, advertized "topping up"one's RRSP with a RRSP bank loan,
keeping the loan for 91 days, canceling the plan, repaying the loan, and using the tax refund as a down payment to buy a
home. The system still exists, however, you may only use the refund as a down payment if you have an equivalent asset to
the amount of the tax refund. In other words, if your refund was going to be $5000, you must already own an asset worth at
least $5000. This asset could be stocks, bonds, a boat & motor, a newer car, etc. Without this asset, the mortgage insurer
(Canada Mortgage & Housing Corporation [CMHC], or G.E. Capital [GEC]) will not allow you to use your refund for that
purpose.

A normal tax refund (without the RRSP top up loan) can be used for the down payment, but ideally the refund should sit in
your bank account for at least 90 days. RRSP's can still be used tax-free for down payment purposes (to a maximum of
$20,000 per person) as long as the vehicle holding the RRSP will allow it. Some RRSP's are locked into Guaranteed
Income Certificates that mature sometime in the future. Those may be difficult to use. Don't forget that by utilizing your
RRSP for that purpose, you must repay your RRSP in equal yearly portions of 1/15th of the amount used. The RRSP can be
used for down payment purposes, as well as closing and legal costs. RRSP's can only be used by first time buyers.

If you are going to use the 95% financing rules, you must also demonstrate that apart from the down payment you have at
least an additional 1.5% of the purchase price in reserve to pay for closing costs. There is no guarantee that this 1.5% will
pay for all the closing costs, but you must show before you buy that you have the funds in your possession.

If your credit rating is less than perfect, or if you are self-employed, or if your job is less than 2 years old, or if you are not
in a permanent position, you should prepare yourself for at least a greater down payment (10-15%). If your debt service
ratios are beyond the norm (32% of gross income to pay for the house, inclusive of property taxes and heat, and 40% of
gross earnings to pay for all debt inclusive of the house), you should be ready to get rid of some debt to bring the ratios in
line. There are very few exceptions to these rules. By the way, a car lease counts as a debt with no asset. If your liabilities
outweigh your assets (negative net worth), your application for 95% financing could be rejected. Once rejected, it is very
difficult to re-apply, unless your down payment has increased.

If you really don't have the 5% mandatory down payment, and you can't get a gift from a close relative, then you should
probably should look at your overall budget and start setting aside as much as you can on a monthly basis, in order to
accumulate the necessary funds. If someone is offering to fool the system on your behalf, it could come back to haunt you.

Once you have been approved for the 95% financing, the lending institution will add 3.75% of the loan amount on top of
the loan to pay for CMHC or GEC. This added amount in a monetary amount and not an increase in the mortgage rate. In
other words, if the rate of interest on your $100,000 mortgage is at 6%, once you have added the CMHC/GEC premium the
loan amount will go to $103,750 but the rate will remain at 6%. This insurance premium gives you nothing, it simply
allows the lender to lend beyond 75% financing. Once added to the loan, you are paying interest on the premium for the
next 25 years. To add insult to injury, the Ontario Government will also charge you Provincial Sales Tax (PST) on the
premium. That tax must be paid cash at the lawyer's office on closing, it cannot be added to the mortgage.