Government down payment loan program coming up short, say Island realtors

Six monthsinto a government loan program aimed at helping more Islanders buy their first-time homes, P.E.I.'s Real Estate Association said it's hoping for somechanges.

'For people to actually qualify, it can be rather difficult'

CBC News Posted: May 07, 2019 6:49 PM EDT | Last Updated: May 7, 2019

A sold sign hangs atop a for sale sign with houses in the background — One of the program's eligibility requirements is that the applicant doesn't have the ability to pay five per cent of the down payment without the program. (Steve Bruce/CBC)

Six monthsinto a government loan program aimed at helping more Islanders buy their first-time homes, P.E.I.'s Real Estate Association said it's hoping for somechanges.

The association said the program isn't working as well as they had hoped. Their concerns centre around the eligibility requirements of household income and thepurchase price of the home.

$80K income threshold too low for down payment assistance program, Bell says

Down payment loan limits will force buyers to rural P.E.I.: Real Estate Association

"For people to actually qualify, it can be rather difficult," said Greg Lipton, president of theassociation.

He said there has been lots of interest in the loan pilot project.

"It has worked for some people ... I wouldn't say it's a total loss," Lipton said.

Mortgage broker Steven Swyer, with The Mortgage Centre, says it can be a challenge for people earning less than $80,000 to qualify for homes worth more than $120,000 and even then there are not many available on P.E.I. (Steve Bruce/CBC)

TheDown Payment Assistance Programpilotaims to help first-time home buyers with up to five per cent of thedown payment of a home, to a maximum loan of $11,250.

The program was designed to run until March 31, 2020 or when the budgeted $1,000,000 infunding runs out, whichever happens first.

The eligibility requirements include being a Canadian citizen and first-time home buyer.The total household income must be $80,000 or less and the cost of the homemay not be more than $225,000.

Properties 'difficult to find'

Over the past six months the program has been in operation, mortgage broker Steven Swyerwith The Mortgage Centresaid he has seen the same problem play out again and again.

By the time you take student loans out of there, car payments out of there, all the rest of it out of there, there's very little left that could qualify you for a mortgage. Steven Swyer, The Mortgage Centre

"You take $80,000 even though it sounds like a lot of money, by the time you take student loans out of there, car payments out of there, all the rest of it out of there, there's very little left that could qualify you for a mortgage," he said.

Swyer said he has run the numbers with peopleand often families earning$80,000 can only qualify for a $120,000 house.

"Properties are getting more and more difficult to find for$120,000in rural P.E.I. and central P.E.I.,no matter where you go," said Swyer.

Steve Swyer at his desk working on a calculator. — Mortgage broker Steven Swyer says he would like to see the household income eligibility requirement raised to the same level as a new federal housing initiative. (Steve Bruce/CBC)

Finance PEI, which administers the loan program, said in a emailed statement to the CBC that the program is working as expected.

The number of successful loan applicants has been slightly lower than predictedbut still within the expected range.

Program could be tweakedif needed

So far, more than $600,000 has been allocated to 93 approved applications to the program.

The province saidthe household income eligibilityis still slightly above what P.E.I.'s median household income was in 2016.

It also points to the Canadian Real Estate Association's numbers on the average price of homes purchased in P.E.I. in 2018, which was less than $225,000.

Finance PEI said it will continue to monitor the pilot program and it will be up to the new government to decide if changes will need to be made.