First Time Home Buyer Loan BC – HOME Partnership Program
The BC Home Partnership Loan for First Time Home Buyers in BC starts application on January 16, 2017, for loans funding February 15,2017-March 31,2020. It’s coming up soon, and there’s a lot of questions coming our way – tricky ones! After attending Td’s first time home buyer seminar last night, here’s some things we picked up.
Tricky Questions that We Have the Answers To:
Can the down payment be gifted?
Yes. The down payment can be gifted (i.e from a parent/relative). You just need to show your mortgage specialist that the gifted funds have been received and where they have been received from – this should be done at the time of pre-approval.
How long is it supposed to take to get the approval?
CMHC estimates about a 3 weeks turnaround from the application date to the actual approval. You’ll have to fill out the application online, then roughy 1-3 weeks later depending on the number of applicants, you’ll receive an email with approval. From there, you can start shopping for your new home and aim closer towards an accepted offer.
Their hopeful timeline is:
- 1 week (5 biz days) from initial online app to initial approval (with pre-approval for 1st mortgage already in place– before heading out to shop)
- 1 biz day from final submission for property approval
- Min 14 calendar days after subject removal then to funding (funding finalized – actual approval)
Is there anything I need to do personally that is not done by my mortgage broker or realtor? How can I ensure that I am going to get the loan at the time of closing?
1) You must obtain pre-approval from the bank. They then go online to apply for the BC Loan Program.
2) Once approved you need to provide the bank with the approval letter. When you have an accepted offer you MUST go back on line and submit the address and amount as the approval letter needs to be updated with the exact amount and ensure the property meets their guidelines.. You will then need to provide this back to the lender.
3) Once you are all approved and have removed subjects, you MUST go back on line and forward the subject removal documents and your lawyer/notary contact info. This MUST be done no less than 14 days to closing. SUPER IMPORTANT!!!!!!******
If all 3 steps are not completed the notary will not have the loan proceeds and the bank will not be able to fund. It is so important that these additional steps are followed (in additional to the standard steps listed in the infographic below) in order to obtain your loan. This information is not online on their website as of today.
What if my partner has owned a home before, but I haven’t? Is there anyway to get around it?
There are a number of times in real estate when the following situation occurs:
- Wife has never bought a home before, husband has (or vice versa)
- Wife decides to purchase a home in her name to avoid the property transfer tax. Title only lists her.
- Post completion after some time passes, wife puts husband on title. Property transfer tax is still avoided.
So… naturally many people are thinking they can do the same thing with regards to this first time home buyer loan. BUYERS BEWARE! You cannot. Repayment starts immediately and in full if the home is sold prior to the 5 year mark, is rented within 5 years and is no longer your principle residence, and/or if you add someone on title. If any changes are made to the original contract in the first 5 years, then it is null and void and payment is due in full immediately.
If there’s more than one person on title, can both of us qualify for the loan individually even though we’re buying the same house?
Nope! One loan per title. So that means if both you and your husband, or you and your brother, etc. are both going on title, there is only one loan per title. Also keep in mind that the income between the number of people on title cannot exceed $150,000.
If I put 15% down, and the government gives me the 5% loan, I now have 20%. Doesn’t that mean that I can now avoid the CMHC Insurance Premiums for putting less than 20% down?
I wish… but the answer is no. One of the requirements for qualification is that you are qualified and have obtained an insured mortgage (i.e. insurance for putting less than 20% down). CMHC will not qualify you based on your total down with the loan included, but rather the actual amount that you put down.
The minimum down payment in BC is 5% for properties equal to or less than 500K. If I only have a 2.5% down can I still qualify?
Yes. In this particular case, you are able to put 2.5% down, the government will match your 2.5%, and you will have a total of 5% given your property is less than or equal to $500,000.
How long is this program valid for?
The government will be loaning funds from February 15, 2017 to March 31, 2020. If you had an accepted offer previously in place (prior to February 15, 2017) if the completion date is prior to February 15 you are not eligible to receive the loan. If you were planning on using the loan but your date is currently prior to February 15, you should consider asking the seller’s to sign an addendum to the contract changing the completion date to post Feb. 15th.
When will we receive the loan?
The funds secured by the loan will be released to the home buyer’s notary/lawyer upon closing, given all prior requirements have been met.
Are there any additional fees associated with the loan?
Yes. The buyers are responsible to pay legal fees for both themselves and the government. The government’s legal team is Singleton Law. The BC Home Partnership was said that the buyer’s are responsible for a $560 fee for their services including all other closing costs.
For details on eligibility and the process, check out our infographic below! We also have examples based on different down payment scenarios and purchase prices.
$475,000 purchase price, 2.5% personal down, 2.5% matching down
This first-time buyer has saved $11,875 towards their down payment, or 2.5% of the home’s purchase price. Through the program, the Province will contribute $11,875, equal to the buyer’s 2.5% down payment. This brings the total down payment to $23,750 or 5% of the home’s purchase price, as required by Canada Mortgage and Housing Corporation
- Minimum Equity Required: $23,750 (i.e. 5% of $475,000)
- Down Payment Sources: $11,875 Traditional & $11,875 Non-traditional
- Purchase Price: $475,000
- Total Loan: $451,250
- Loan to Value Ration (LTV): 95%
- Premium Rate Due: 3.85% (non-traditional sources)
$750,000 purchase price, 7% personal down, 5% matching down
The first-time buyer in this example has saved 7% of the home’s purchase price as a down payment, or $52,500. A 5% down payment is required for the first $500,000, and 10% for the remaining portion. This means the minimum down payment required for a home valued at $750,000 is $50,000. The Province will meet the buyer’s contribution up to 5% of the home’s purchase price. In this example, the program will contribute $37,500 towards the down payment, allowing this buyer to put a total of $90,000 ($52,500 personal + $37,500 loan) towards the down payment of their first home.
- Minimum Equity Required: $50,000 (i.e. 5% of $500,000 and 10% of $250,000)
- Down Payment Sources: $52,500 Traditional & $37,500 Non-Traditional
- Total Loan Amount: $660,000
- LTV: 88%
- CMHC’s supplemental down payments premium calculation applies – in this case the down payment from traditional sources is less than 10 percent of the lending value therefore the premium must be calculated based on the LTV taking into consideration the down payment from traditional sources only.
- LTV based on traditional sources only is 93%
- Premium Rate Due: 3.60% (traditional sources)
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