zero down home purchase

About the BC Home Partnership Program

Jeff Evans

The newest program initiative offered by the BC government has been officially launched as of Jan. 16th.  The program is called the BC Home Partnership Program, and under the terms of the program, eligible first-time homebuyers will be able to receive 5% of the value of your home purchase up to a maximum of $37,500 on a maximum property value of $750,000.  The program matches, dollar for dollar, the down-payment of the home buyer.  The program provides the funds secured by a second mortgage behind your regular mortgage.

In order to qualify for the program, you need to also need to meet the following requirements:

-Be a Canadian citizen or permanent resident that has resided in Canada for at least five years.

-Have resided in British Columbia for the last 12 months.

  • -Be a first-time homebuyer who has not owned an interest in a principal residence anywhere in the world at any time and has never received a first-time homebuyers’ exemption or refund.
  • -Purchase a home that is $750,000 or less.
  • -Be eligible for a high-ratio insured first mortgage for the home.
  • -The combined, gross household income of all individuals on title must not exceed $150,000.
  • -The home being purchased must be used as the principal residence of all individuals on title for the first five years after purchasing.

How beneficial is this program?

I believe this is the primary question that everyone should look at.  The program has gotten a lot of media attention and many people have had high hopes that this program would be helpful.  I believe that it will be helpful mostly for those who can qualify for a home except for the fact that they do not have the full 5% down-payment.  For the few people who would have between 2.5% down and 5% down, this program will allow them to get into the real estate market.  It will also be helpful for those people who want to have some money for renovations or new furniture or appliances for their new home, and will give them some breathing room with which to decrease their downpayment in order to afford these items.  It could also help some people with paying off higher interest debt that could not afford to use their down-payment to do so previously.

Who does this program not help?  Generally speaking, anyone who does not fit the above cannot be helped by this program.  In my estimation, the restrictions on the program rule out most people in one way or another.  New immigrants will not be eligible, and those who already have at least 5% down will not really need the program.  There is also an issue with the mortgage insurance will nullify the interest savings benefit somewhat.  To take advantage of this program, it would require a different type of mortgage insurance that carries a premium .25% higher than the regular program.  For a $500,000 mortgage, this will result in a $1,250 higher mortgage premium.  That dollar amount is added onto the mortgage and will gradually be paid off with the mortgage.

Conclusions about the BC Home Partnership Program

It is my belief that this program will help some people, but not many, but it looks like it is much greater than it actually is.  The reason I believe they came out with this program was to look good for an upcoming provincial election, to make it look like they were doing something to help with housing affordability.  However, some people will stand to benefit from this, and you may be one of them.  Give me a call and we can talk about your individual circumstances and figure out if you are eligible for this program, and more importantly, your ability to qualify to purchase a home, even if you do not qualify for this program.


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