The BC Home Partnership Program is a First-time Home Buyer assistance program sponsored by the BC Government for three years (note there is an end point!). The program is for Canadian Citizens who have resided in BC for the past 12 months. The home to be purchased must have a maximum price of $750,000 and the buyers must have a combined household income of $150,000 or less.
Under the new program BC Housing will provide a 25 year loan with no interest or payments for the first 5 years. The loan amount will match the home buyer(s) own down payment up to 5% of the purchase price. Payments begin after the first five years based on a 20 year amortization at a low interest rate such as prime plus .5%. Although payments don't begin for 5 years, most lenders are factoring in a 20 year loan payment based on the Bank of Canada qualifying rate (Currently 4.64%) into debt service ratios.
Benefits of the BC Home Partnership Loan
For Borrowers with less than 5% down payment saved up, this matching loan can help them over the top. In that sense it is simply the best possible version of CMHC's existing 'flex-down' program. The flex-down program allows any borrower with verifiable income and strong credit to borrow all or part of their down payment as long as the loan payment can fit into CMHC's maximum debt service ratios. First-time buyers please note that to satisfy CMHC you will need to verify another 1.5% of the purchase price for closing costs. For first time buyers with 5% down saved already, the BC Home Partnership program will enable them to reach the 10% down payment threshold which qualifies them for a substantially reduced CMHC fee.
The Downside of the BC Home Partnership Loan
The downside of the Home Partnership loan is: you have to pay it back! It will take it's toll on the family cashflow in five years time when payments begin. You may or may not be able to refinance the mortgage to consolidate the loan into your first mortgage at that point depending on what property values have done. Another thing to consider is that if you choose to make your home into a rental BC Housing will ask you to pay out the loan as well.
How to Apply
If you think you might be eligible for the BC Home Partnership loan, click here to link to the overview website. The procedure is to establish eligibility for the loan initially and then apply and fulfill the requirements in parallel with your regular mortgage application. Call, email, or use our cool new online meeting scheduler to schedule a phone or in-person appointment to answer questions about buying your first or your next home.