A new government program promises to match the down payment for eligible first-time homebuyers.
The BC Government has announced today the BC Home Owner Mortgage and Equity Partnership Program.
Under the program, the BC government will match down payment funds of eligible first-time homebuyers up to $37,500 with a 25-year term second mortgage.
As an example, a buyer purchasing a $300,000 home can put down 5% using $7,500 of their own funds and $7,500 from the BC Home Partnership Program.
No payments are required and no interest will accrue until the sixth year of the mortgage term.
“This is a necessary program which will assist many first time home buyers to enter the housing market at a time when housing affordability is a serious challenge. This program will provide tangible, necessary assistance which will facilitate the purchase of first homes for many BC residents struggling to save sufficient funds for a property down payment,” said Samantha Gale, executive director at the Canadian Mortgage Brokers Association, “There are many potential buyers in BC who simply cannot afford to buy a home because they do not have the necessary down payment saved, despite having sufficient income to qualify for their mortgage payments.
“We find that most potential buyers are aiming to put down on a property purchase either the minimum 5% for an insured mortgage or 20%, so that their mortgage is conventional with no CMHC fees. We at the CMBA, believe that the borrowers who are aiming to put 5% down are the ones whom this program is likely to benefit the most.”
Applications for the program will be accepted starting January 16 up until March 31.
Below are the qualification requirements. Buyers must:
• Reside in the home
• Be a first-time homebuyer
• Be a Canadian citizen or permanent resident for 5 years
• Have resided in BC for at least one year
• Have a combined gross income of $150,000 or less
• Have saved at least half of the minimum down payment they will require, and
• Be pre-approved for a 1st mortgage before applying. Brokers should treat the second mortgage as a non-traditional source of down payment.
Additionally, the property must be the principal residence for the first five years, must cost less than $750,000, and must not be a rental or recreational property.
On a personal note, I am really happy to see this program being made available. In the past nine years that I have been working in real estate in the Comox Valley I have seen first time home buyers struggling more and more each year. For this reason I have always paid for the building inspection for first time home buyers, it's a time in their life when every dollar counts.
Unfortunately this program will negatively effect the purchasing power of buyers using it so it will not help all first time home buyers. First time home buyers with strong income but lower savings (perhaps right after a wedding, or after paying off school loans) will see the most benefit.