The B.C. government has announced interest-free loans to first-time homebuyers to help them pay for the cost of a mortgage down payment.
Called the B.C. Home Owner Mortgage and Equity Partnership, the program will provide a government-backed loan of up to $37,500 (or 5% of the purchase price) of a home for qualified buyers, starting Jan. 16.
The 25-year loan is interest-free for the first five years and does not require the homeowner to even pay down the principal during those first five years, as long as they keep the home as their principal residence.
Extra payments or full repayment at any time will be allowed, according to the government. The loan must be repaid in full when the home is sold or transferred to another owner.
The new program will cost the province about $703 million over the next three years to help and is expected to help 42,000 B.C. people enter the market for the first time.
To be eligible, a first-time homebuyer must be preapproved for an insured high-ratio, first mortgage. They must also meet the following criteria:
- Have been a Canadian citizen or permanent resident for at least five
- Have resided in British Columbia for at least one year immediately preceding the date of 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
- 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.
Applications for the BC Home Partnership open January 16, 2017.
There are other programs available to help first-time buyers save on property transfer tax. The First Time Home Buyers Program can save first-time buyers up to $7,500 when purchasing a home valued up to $475,000. Or, first-time buyers can access the Newly Built Homes Exemption, which can save buyers up to $13,000 in property transfer tax when purchasing newly constructed or subdivided home worth up to $750,000.