First-Time Home Buyers’ Loan – Blessing Or Curse?
Eager to become a home-owner but having trouble coming up with the down payment for your first home? You’re not alone. Vancouver, one of the most expensive cities to live in North America, has an enormous average home price of $748,651. It is not surprising several Vancouverites are having trouble breaking into the real estate market and joining the club of first-time home buyers.
Is there light at the end of the tunnel? Some say yes, some disagree. The BC Government has recently announced they will loan some cash to first-time home buyers to help with their down payment.
The BC Home Owner Mortgage and Equity (HOME) Partnership program outlines a 25-year loan, interest free, for the first five years and offers up to $37,500 (or five per cent of the purchase price) to first-time home buyers. It is meant to help move renters into home ownership where possible.
Too good to be true? There must be a catch!
In fact, there are quite a few requirements to qualify for the program.
To be eligible for this program, the home-owner must:
- be buying their first home
- obtain a high-ratio, insured first mortgage for at least 80 per cent of the purchase price
- have a combined gross household income not exceeding $150,000
- have saved a down payment amount at least equal to the loan amount
- be a Canadian citizen or permanent resident for at least five years; and
- have lived in BC for at least the full year preceding their application
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 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
Applications for the program will begin on January 16, 2017
Thoughts? Questions? Or if you just want to chat about breaking into the home owners’ market, give us a shout. We’re here to help.
Also, check out our 10 step buying process to help get the ball rolling on finding your new home!