Are you looking to buy a home, but struggling to come up with the down payment? In this article, we’ll go over down payment assistance programs available in Canada. Federal programs, provincial programs, and additional programs available to help you get the down payment you need.
Key Takeaways
- The First-Time Home Buyers Incentive is a federal program anyone can qualify for regardless of where you’re buying in the country.
- Most provinces have a down payment assistance program, but some are only available in select areas.
- There are also private down payment assistance programs worth looking into, such as Lotly and Ourboro.
Federal Down Payment Assistance Programs: The First-Time Home Buyers Incentive
If you are looking for a way to make your dream of homeownership more affordable, you might want to consider the First-Time Home Buyer Incentive. This program helps you reduce your monthly mortgage payments by giving you an additional 5% or 10%. This amount is used to increase your down payment.
The catch is that you have to pay back the Government either 5% or 10% of the value of your home when you sell it or after 25 years, whichever comes first. The amount you have to pay back depends on how much your home has increased or decreased in value since you bought it. The Government will share in the profit or loss of your home, up to a maximum of 8% per year (not compounded) on the amount they gave you.
This program is only available for first-time homebuyers. This means anyone who has never owned a home before, has not lived in a home owned spouse or partner in the past 4 years, or has gone through a divorce or separation recently.
Who Is Eligible?
To qualify for the incentive, you need to meet these criteria:
- Your annual income is $120,000 or less ($150,000 for Toronto, Vancouver, or Victoria).
- Your total borrowing is no more than 4 times your income (4.5 times for Toronto, Vancouver, or Victoria).
- You have a minimum down payment from traditional sources (savings, RRSP, or gift from family).
- You have a first mortgage that is more than 80% of the home value and insured by Canada Guaranty, CMHC or Sagen.
- You are a Canadian citizen, permanent resident or authorized to work in Canada.
The amount of the incentive depends on the type of home you buy and whether it is new or existing. You can get 5% or 10% of the home value for new construction, 5% for existing homes, and 5% for mobile or manufactured homes. The incentive is like a second mortgage that you don’t pay interest on.
The incentive is available for residential properties with 1 to 4 units.
Provincial Down Payment Assistance Programs
Here is an overview of provincial and city-specific down payment assistance programs.
Ontario: Kitchener (Waterloo Region)
If you are looking for a new home in Kitchener, you are in luck. The city is offering a generous program to help first-time home buyers with their down payment. The program is called the Affordable Home Ownership Program, and it works like this:
- The city will lend you 5% of the purchase price of your home, interest-free and payment-free if you live in it for at least 20 years.
- If you decide to sell or move out before 20 years, you will have to repay the loan based on 5% of the current market value of your home (like the federal First-Time Home Buyer Incentive).
To be eligible, you must have been a resident of Waterloo Region for at least 12 months, have a household income of no more than $101,300, be buying a home in the region for $506,000 or less and meet some other requirements.
Ontario: Barrie (Simcoe County)
If you are looking for a home in Barrie (Simcoe County), you might be eligible for a loan from the county to cover up to 10% of the purchase price. This loan is interest-free and does not require monthly payments. The only condition is that you share the same percentage of the property value with the county when you sell your home; unless you keep it as your primary residence for more than 20 years. In that case, the loan is forgiven.
To qualify, you need to have a household income of no more than $75,100 and buy a home that costs no more than $462,645.
Quebec: Montreal
If you are looking for an affordable and quality home in Montreal, you might be interested in the Accès Condos program. This program offers you the opportunity to buy a condo with a 10% purchase credit, which reduces your down payment to $1,000. You can also benefit from attractive financing conditions from the program’s partner financial institutions.
The Accès Condos program is managed by the Société d’habitation et de développement de Montréal (SHDM), a non-profit organization that aims to improve the housing conditions of Montrealers.
To be eligible for the Accès Condos program, you must meet certain criteria, such as occupying the unit as your principal residence.
Alberta: Calgary
If you are looking for a way to buy a home in Calgary, Alberta, with a low down payment, you might be interested in the Attainable Homes Program. This program is designed to help moderate-income earners achieve homeownership by providing them with a grant that covers most of the down payment. The only requirement is that you pay $2,000 upfront and meet the eligibility criteria.
The Attainable Homes Program is not a gift, though. It is a shared equity program, which means that when you sell your home, you have to share a portion of the appreciation value with the program. The amount you have to share depends on how long you stay in your home. The longer you live there, the more equity you get to keep.
Manitoba: Some Rural Areas
The Homeownership Program helps low- to moderate-income households purchase a home. The program provides financial assistance in the form of a forgivable loan for the down payment and closing costs.
The loan amount is based on the household income, the purchase price of the home, and the location of the property. The loan is forgiven over five years, as long as the homeowners maintain ownership and occupancy of the home.
To be eligible for the Homeownership Program, you must meet certain criteria, such as:
- Being a first-time home buyer or not having owned a home in the last five years.
- Having a total household income below the established income limit for your area.
- Being able to qualify for and obtain a mortgage loan from an approved lender.
- Being able to cover the additional costs of homeownership, such as property taxes, insurance, utilities, and maintenance.
- Purchasing a home that meets the program’s standards for quality, size, and price.
New Brunswick
If you are a low-income household in New Brunswick, you may be eligible for the Home Ownership Program. This program provides financial assistance to help you buy or build a modest home that meets your needs.
You can receive a forgivable loan of up to 40% of the purchase price of an existing home or up to 50% of the construction cost of a new home (up to $75,000).
To be eligible for the program, you must:
- Have a total household income of $40,000 or less.
- Have a good credit rating and be able to obtain a mortgage from a bank or credit union.
- Not own or have a legal interest in any other property.
- Agree to use the home as your principal residence.
Nova Scotia
If you are a first-time homebuyer in Nova Scotia, you may be eligible for a loan that can help you with the down payment on your dream house. The Down Payment Assistance Program (DPAP) is a government initiative that provides interest-free loans of up to 5% of the purchase price of a home, up to a maximum of $25,000. The loan is repayable over 10 years and can be combined with other sources of funding.
To qualify for the DPAP, you need to meet certain criteria, such as:
- You have a household income of $145,000 or less.
- You have a good credit history and a pre-approved mortgage.
- You are buying a home that costs no more than $500,000 in Halifax County and the Municipality of East Hants (a lesser amount in the rest of the province).
- You intend to live in the home as your primary residence.
- You have completed a homebuyer education course.
Prince Edward Island (PEI)
Are you looking for a way to buy your first home in Prince Edward Island? If so, you might be interested in the Down Payment Assistance Program offered by Finance PEI. This program provides eligible applicants with a repayable loan of up to 5% of the purchase price of a new or existing home, up to a maximum of $17,500. The loan is interest-free and has a maximum term of 10 years.
To qualify for the program, you must:
- Be a first-time homebuyer or a person with a disability who is buying a home that meets your needs.
- Have a household income of $100,000 or less.
- Have a pre-approved mortgage from an approved lender.
- Live in the home as your primary residence.
The program is available for homes with a maximum purchase price of $350,000. The loan amount is based on the lesser of the purchase price or the appraised value of the home. The loan is secured by a second mortgage on the property and must be repaid in monthly installments.
Other Down Payment Assistance Programs In Canada
Here is an overview of other down payment assistance programs in Canada and eligibility criteria.
Lotly
If you want to buy a home but don’t have enough savings for a 20% down payment, Lotly can help you. Lotly is a platform that connects you with investors who are willing to co-invest in your home purchase.
Here’s how it works:
- You find a home you like and can afford with a mortgage.
- You apply for Lotly and get matched with investors who are interested in your home.
- You make a 5% down payment, and the investors contribute up to 15% of the home price, or up to $250,000, whichever is lower. This way, you reach a 20% down payment and avoid paying CMHC insurance fees.
- You get a mortgage for the remaining 80% of the home price and move in.
- You pay back the investors within 10 years, either by refinancing your mortgage, saving up, or selling the home.
Lotly is a great option for aspiring homeowners who need a boost to reach their dream. With Lotly, you can buy a home sooner, save on insurance fees, and enjoy the benefits of homeownership.
Ourboro
If you are looking for a way to buy a home with less money upfront, check out Ourboro. Ourboro is a company that helps you co-own a home with them. They will put down 5% to 15% of the home’s purchase price, up to $250,000, as a down payment.
You will only need to put down 5% of the purchase price yourself. The ownership share of the home will depend on how much each party contributes to the down payment. For example, if you put down 5% and Ourboro puts down 15%, you will own 25% of the home’s appreciation.
Ourboro is not available everywhere, though. You can only use their service if you are buying a home in the Greater Toronto Area (GTA) or some parts of Southwestern Ontario, such as Hamilton and London.
Ourboro is an innovative way to make homeownership more accessible and affordable for people who have less savings or income.
Bottom Line
As you can see, there are a variety of down payment assistance programs available. First-time home buyers, specifically, should always check if their province offers down payment assistance. These types of programs can alleviate some of the financial burden of purchasing a house and make homeownership a reality for many Canadians.
