Applications are now open for a new $37,500 government loan being offered to first-time homebuyers in BC – if they’ve saved the same for a downpayment.
The BC Home Owner Mortgage and Equity (HOME) Partnership program was announced in December, as a way of helping people get into the real estate market.
The program will provide up to $37,500 (or up to 5% of the purchase price) with a 25-year loan that is interest-free for the first five years.
In a statement, Rich Coleman, BC Minister of Natural Gas Development and Minister Responsible for Housing, backed the new loan program.
“We are confident that the new BC HOME Partnership will help turn the dream of home ownership into a reality for many British Columbians,” said Coleman.
“This program will help first-time homebuyers build a secure and stable future for themselves and their families.”
Maximum purchase price of $750,000
However, to be eligible, homebuyers must be paying $750,000 or less for the property and obtain a high-ratio insured mortgage for at least 80% of the purchase price.
According to the latest figures from real estate brokers Royal LePage, that maximum purchase price rules out everything except condos in Metro Vancouver.
And while the program is one of many measures introduced lately to try to make the red hot property market more accessible, not everyone is convinced.
David Eby, MLA for Vancouver-Point Grey and BC NDP housing critic, told Daily Hive previously he was “astounded” that this was the government’s solution.
“I’m astounded that the government’s response to the housing crisis and a situation faced by young people trying to get into the housing market was to suggest that they borrow more money and the government would provide them with the opportunity to get into further debt,” said Eby.
“What this does really is it significantly increases demand for housing under the $750,000 level across the province which will increase the cost of housing because there is a fixed supply.”
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The effect of the loan program is yet to be seen, but if you want to apply, here’s the lowdown:
To be eligible for the loan, first-time homebuyers must be approved for an insured high-ratio first mortgage. They also must meet the following criteria:
- Have been a Canadian citizen or permanent resident for at least five years
- Have resided in BC for at least one year preceding the date of the application
- Be a first-time buyer who has not owned an interest in a residence anywhere in the world at any time
- Use the property as their principal residence for the first five years
- Purchase a home that has a purchase price of $750,000 or less (excluding taxes and fees)
- Obtain a high-ratio insured first mortgage on the property for at least 80% of the purchase price
- Have a combined, gross household income of all individuals on title not exceeding $150,000
- Have saved a down payment amount at least equal to the loan amount for which the buyer applied
During the first five years, there will be no monthly interest or principal payments as long as the home remains the home buyer’s main residence.
After the five years, homebuyers will make monthly payments at current interest rates. The loan can be paid off over the remaining 20 years.
However, they can make extra payments or repay it in full any time without a penalty. The loan also must be repaid in full when the home is sold or transferred to another owner.
Applications for the BC HOME Partnership program loan are now being accepted for purchases that close on or after February 15.