On December 15th 2016 Premier Christy Clark unveiled a new loan program to help first-time home buyers come up with their down payment. This program is designed to make it easier for the first-time home buyers to into the Real Estate Market.
The BC Home Owner Mortgage and Equity (HOME) Partnership program will offer qualifying first-time home buyers loans of up to $37,500, interest and payment free, for up to five years. It’s basically a second mortgage on the property that you don’t have to make any payments on for the first 5 years.
The province will begin accepting applications from qualified first-time buyers on January 16, 2017.
To qualify, buyers must:
1. Be buying their first home
The buyers who previously owned real estate anywhere in the world DO NOT qualify for this program.
2. Obtain a high-ratio, insured first mortgage for at least 80 per cent of the purchase price
The buyers can not have a downpayment on the property larger than 20% of it’s value. They must obtain CMHC insurance.
3. Have a combined gross household income not exceeding $150,000
The buyers who will have their names on the tittle must collectively earn less than $150,000/year.
4. Have saved a down payment amount at least equal to the loan amount
The BC government will only land the buyers 50% of the total downpayment. The other half of the downpayment will have to come from the buyers themselves. In other words first-time buyers will still have to contribute at least 2.5% downpayment.
5. Be a Canadian citizen or permanent resident for at least five years
Foreign buyers will not be eligible to take advantage of this program.
6. Have lived in BC for at least the full year preceding their application
In other words potential buyers will have to have lived in British Columbia for at least 1 year before applying for this program.
The loans will be due in full if the buyer defaults on a payment, ceases to use the home as a principle residence or resells the home.
• The BC government loans will match a home buyer’s contribution to a down payment up to five per cent of the home’s purchase price.
• The maximum purchase price to qualify for a loan is $750,000 (excluding taxes and fees).
• After five years, buyers can either repay their loan or enter into monthly payments at current interest rates.
• Loans through the program are due after 25 years. The same as standard mortgage.
“This program will boost sales to first-time home buyers. Without question, they’ll take advantage of it wherever they can,” said Helmut Pastrick, Central 1 Credit Union chief economist.
The province estimates this initiative will help at least 42,000 buyers or households province-wide over the next three years. About half of these buyers will be in the Lower Mainland, according to Pastrick.