What is New BC Mortgage Loan Program for First-Time Buyers?

 The BC Home Owner Mortgage and Equity Partnership Program helps eligible first-time home buyers who have saved part of a down payment and can afford a mortgage. This three-year program began accepting applications January 16, 2017 and ends March 31, 2020. 

2  The program offers a down payment loan of up to 5% of a home’s purchase price, to a maximum of $37,500, on a home with a maximum price of $750,000. The loan matches the buyer’s down payment and is interest-free and payment-free for five years.

3  Before applying, the applicant must have a partial down payment saved (or gifted) and must be pre-approved for a high-ratio insured first mortgage for at least 80% of the purchase price. Buyers must have qualified under all rules for a mortgage including the stress test. The combined, gross household income of all individuals on title cannot exceed $150,000.

4  The pre-approval letter can come from a mortgage broker.

5  To qualify, the home buyer(s) must meet requirements on this eligibility checklist. They must be a Canadian citizen or permanent resident for at least five years, have lived in BC for one year, be a first-time buyer who hasn’t owned an interest in a residence anywhere in the world at any time, and plan to live in the home as their principal residence for the first five years.

6  The program is delivered entirely online with a smartphone friendly interface. There’s no physical paperwork. Buyers submit their application here. They must register first. This online calculator helps determine eligibility.

7  Only the buyer can complete the application. There are liability considerations. If the buyer claims to have never owned a home anywhere in the world, and the government later discovers this is untrue, the buyer can’t say “My REALTOR® completed the application for me.” If the buyer has questions they can phone the BC Housing information line at 604-439-4727. Staff members speak multiple languages.

8  In BC, 87% of apartments, 73% of attached homes, and 19% of detached homes currently on market could qualify for this program, according to Dan Maxwell, Chief Financial Officer of BC Housing.

9  After five years, buyers repay the loan or begin monthly payments at a fixed rate equal to the Royal Bank of Canada Prime Rate plus 0.5%. This interest rate is reset at each of the 10, 15 and 20 anniversaries. Loans are due after 25 years.

10  The home buyer is responsible for all costs associated with the purchase and financing of their home, including legal costs.

How many loans?
The government forecasts: •   42,108 loans will be issued by 2020. •   These will have a total dollar value of $703 million. •   The average loan will be $16,685.

The Process

1  The applicant gets pre-approval for insured first mortgage.

2  The applicant applies to BC Housing (BCH) which issues a confirmation of eligibility letter highlighting details and key dates within five business days. BCH issues a Home Buyer’s Package.

3  The applicant makes offer to purchase an eligible home, and provides BCH with copy of Contract of Purchase & Sale.

4  BCH issues Conditional Loan Approval Letter for the applicant to take to the lender to finalize first mortgage approval.

5  The applicant completes due diligence and removes subjects.

6  The applicant provides BCH with the unconditional Contract of Purchase and Sale at least 14 days before closing.

7  BCH’s lawyer sends the mortgage package and closing instructions to the applicant’s lawyer.

8  The applicant completes the home purchase with their lawyer. The BC HOME loan is secured by a second mortgage registered on title to the home on the closing date. The HOME Partnership loan funds are released following registration of second mortgage.

Example #1 – Home purchase price $475,000, home buyer has saved $11,875 
• Minimum down payment required for an insured first mortgage - $23,750 
• BC HOME Partnership loan - $11,875 (equal to home buyer’s down payment, equal to 2.5% of purchase price) 
• Total down payment - $23,750

Example #2 – Home purchase price $750,000, home buyer has saved $52,500 
• Minimum down payment required for an insured first mortgage - $50,000 
• BC HOME Partnership Loan - $37,500 (maximum 5% of purchase price) 
• Total down payment - $90,000