A 2 per cent down payment could open up financing for first-time homebuyers in Nova Scotia if they apply for a mortgage through one of the province’s 11 participating credit unions. The Nova Scotia government is backing the newly announced initiative, which is open to applicants with household incomes no greater than $200,000 who meet Canada Mortgage and Housing Corporation (CMHC) and creditworthiness criteria.
“This partnership with the Province of Nova Scotia reflects a shared recognition across the credit union system that there is a growing group of people who are capable, responsible and ready for homeownership, but who need the right support to take that next step,” maintains Paul Masterson, president and chief executive officer of Central Atlantic, an association representing member credit unions throughout Atlantic Canada.
“Nova Scotians told us that in today’s rental market, they are struggling to save the down payment to buy a new home. This program is making it more affordable to come up with a down payment,” says the provincial Housing Minister, John White.
First-time homebuyers may be eligible for financing of up to 98 per cent of the purchase price at a maximum interest rate of the prime rate plus 2 per cent. To qualify, mortgage candidates must be residents of Nova Scotia who are acquiring a home located in the province for their principle residence. The maximum allowable purchase price will be $570,000 within the Halifax Regional Municipality and neighbouring East Hants region, or $500,000 elsewhere in the province.
Applicants will be automatically screened for eligibility when they apply for a mortgage through a participating credit union. In addition to first-time buyers, former homeowners who have not owned a home for at least the four preceding years may be eligible.
Qualifying borrowers will not need mortgage insurance, but the deficiency guarantee that comes via the Nova Scotia government’s backing of the program is not transferable. Mortgage insurance may be required if borrowers later transfer their mortgage to a national bank or other lender.
The Nova Scotia government has also agreed to cover 90 per cent of the shortfall in a scenario where a borrower defaults and the lender is unable to recover the outstanding mortgage on the subsequent sale of the home.
