New Loan Down Payment Program For First-Time Home Buyers
First-time homebuyers will soon be able to access 25-year down payment loans of up to $37,500, or 5% of the purchase price, that are interest-free—and payment-free—for the first five years.
B.C. Premier Christy Clark announced December 15 the provincial government is investing $703 million over the next three years to fund the program, which will be carried out by the B.C. Home Owner Mortgage and Equity Partnership Program. It estimates this will help 42,000 enter the market for the first time.
Rich Coleman, Minister Responsible for Housing, said the program is part of the government’s focus on tackling housing affordability issues in the province.
“The first step into the market can be the hardest step, so our government will partner with homebuyers to help them achieve their minimum down payment,” Coleman said. “This partnership can help lower their monthly costs in the first five years, and help make home ownership more affordable.”
The home must remain the homebuyer’s principal residence for the first five years to keep the loans interest- and payment-free over the period. After this point, homeowners will make monthly payments at current interest rates for 20 years. The loan can be repaid in full without penalty at any time, but the full amount must be repaid when the home is sold or transferred to another owner.
Buyers need to qualify for insured high-ratio first mortgages. They would receive loan proceeds on sale completion. The loan will then be registered as a second mortgage.
Applications do not start until Jan 16, 2017 and loans advanced from Feb 15, 2017 to March 31, 2020. The Buyer must be a Canadian citizen or permanent resident for at least 5 years, resided in BC for at least 12 months, make less than $150,000 (as a family) and must be pre-approved for the first mortgage before applying.
The program will begin accepting applications for the new program January 16, 2017.