Government down payment loan program coming up short, say Island realtors
'For people to actually qualify, it can be rather difficult'
Six months into 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 some changes.
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 the purchase price of the home.
"For people to actually qualify, it can be rather difficult," said Greg Lipton, president of the association.
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.
The Down Payment Assistance Program pilot aims to help first-time home buyers with up to five per cent of the down 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 in funding 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 home may not be more than $225,000.
Properties 'difficult to find'
Over the past six months the program has been in operation, mortgage broker Steven Swyer with The Mortgage Centre said 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 people and often families earning $80,000 can only qualify for a $120,000 house.
"Properties are getting more and more difficult to find for $120,000 in rural P.E.I. and central P.E.I., no matter where you go," said Swyer.
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 predicted but still within the expected range.
Program could be tweaked if needed
So far, more than $600,000 has been allocated to 93 approved applications to the program.
The province said the household income eligibility is 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.
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With files from Steve Bruce