Vancouver developer offers to sell condos with 0% downpayment

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A local developer Townline Homes has made some headlines in the last couple of weeks. This Vancouver development company wants to sell condos in their new development – The Strand, in Port Moody with a 0% downpayment.  This proposal has been already accepted by BC Housing. However, Canadian Mortgage and Housing Corporation (CMHC) has not approved the proposal yet.

How does the program work? 

The price of the condos will be discounted for a minimum of 8% (as recognized by CMHC). This discount will act as a downpayment. The buyer then mortgages the entire remaining amount. This program will require no vendor take back mortgage or a second mortgage. You will have to own the property for a minimum of 2 years before selling to keep 100% of the profits (including the developer discount).

Who can qualify for the program? 

This program was designed for lower income families who can not afford the cash downpayment required for most purchases. In order to qualify for the program you must be making under $65,000 (as a household) for a one bedroom condo, and under $92,000 (as a household) for a one bedroom plus a den condo.  This regulation is put in place to prevent wealthy investors taking advantage of the program.

1 bedroom + den + workstation floor plan

Why was this program proposed? 

The program is proposed to help lower income families get into the real estate market. It is a noble cause. Although, the developer might have another reason – PR! It makes them look good and brings a lot of attention to the development. It is worth mentioning that only a small percentage of units in the development are dedicated to the affordability program. The rest of the development is sold as usual.

It’s a win-win situation for the development company. If CMHC approves their proposal, it makes them look awesome. Selling these affordable units will be very easy. If CMHC does not approve their proposal, the developer still comes up on top. Hey, at least they tried to do something.

But lets dismiss this program as a PR stunt; it is a great initiative. It will help some young people get into the real estate market. It is a true win-win situation. The buyers get to buy a brand new condo with 0% downpayment and the developer gets some pretty good exposure.

In my opinion we will see more affordability programs like this one in the upcoming years.