NOTE: The 2015-16 Down payment Assistance Program (DAP) is now closed. Applications postmarked after December 9, 2015, will not be accepted, as funding has been fully committed.
Who is eligible?
Applicants must be first-time home buyers from any region of the province who meet the DAP requirements and all other criteria for approval from a financial institution.
The program will assist approximately 100-125 applicants annually.
The program will provide eligible households a repayable loan of up to five percent of the purchase price of a new or existing home, to a maximum purchase price of $250,000 (St. John’s [Census Metro Area] and Labrador;$200,000 in regional centres (Clarenville, Gander, Grand Falls-Windsor, Corner Brook and Stephenville and all communities within a 30 km radius ); $175,000 (in the remainder of the Province [Rural]).
The amount of the loan will be based on a sliding scale that takes into consideration the applicant’s household income level and the cost of the home being purchased.
What are the income limits?
Applicants must have a total household income of less than $65,000 to qualify for the full loan.
Total household incomes up to $75,000 are also eligible based on a sliding scale of assistance.
How much Downpayment Assistance can you receive?
Loan amounts are based on the maximum 5% of purchase price and are subject to maximum purchase prices established by the program:
$250,000 (St. John’s [Census Metro Area] and Labrador;
$200,000 in regional centres (Clarenville, Gander, Grand Falls-Windsor, Corner Brook and Stephenville and all communities within a 30 km radius); and
$175,000 (in the remainder of the Province [Rural]).
For example, in St. John’s and Labrador where housing prices are highest, the maximum loan provided to applicants with a household income of $65,000 will be $12,500, while the maximum loan for applicants in the same regions with a household income of $75,000 will be $7,500.
Homeowners with incomes between $65,000 and $75,000 are eligible for assistance, however the amount of assistance they can receive is reduced on a sliding scale as per the chart below:
SLIDING SCALE OF ASSISTANCE
INCOME LEVEL ST. JOHN'S AND LABRADOR
Maximum Loan Amount* REGIONAL CENTRES
Maximum Loan Amount RURAL NEWFOUNDLAND
Maximum Loan Amount
<$65,000 $12,500 $10,000 $8,750
$66,000 $12,000 $9,500 $8,250
$67,000 $11,500 $9,000 $7,750
$68,000 $11,000 $8,500 $7,250
$69,000 $10,500 $8,000 $6,750
$70,000 $10,000 $7,500 $6,250
$71,000 $9,500 $7,000 $5,750
$72,000 $9,000 $6,500 $5,250
$73,000 $8,500 $6,000 $4,750
$74,000 $8,000 $5,500 $4,250
$75,000 $7,500 $5,000 $3,750
* Maximum loan amounts are based on the maximum 5% loan available, subject to maximum purchase prices ($250,000 in St. John's [Census Metropolitan area] and Labrador; $200,000 in the five regional centres of Clarenville, Gander, Grand Falls-Windsor, Corner Brook and Stephenville and all communities within a 30km radius; and $175,000 in the rest of Newfoundland and Labrador [Rural]).
Is there any flexibility with the Program regarding maximum purchase price?
Yes, the DAP pilot also includes a Variance Policy to allow, upon approval, the purchase of homes at prices of up to ten per cent above established maximums within the policy for St. John's CMA, Labrador and regional centres.
However, the maximum assistance available to clients who purchase homes within the Variance Policy is capped at 5% of the maximum purchase price for their region. Clients will be responsible for providing any funding above this assistance that is required to meet the 5% requirement for a downpayment. (See “Examples”)
What are the Downpayment Assistance Program interest rates?
Interest rates will vary, depending on when the client decides to start repaying the downpayment loan; however, it will not exceed the prime lending rate minus one percent.
What else should you know about a DAP Loan?
Successful applicants would not be required to begin paying back this loan for five years after the purchase of a home; the most an applicant would repay in any given month would be just over $100.
Clients may choose to begin loan repayment earlier if they have the financial ability.
What does the educational component cover?
The educational component entails learning opportunities on financial planning; debt management and home maintenance and upkeep. These sessions can help ensure they benefit from every opportunity to become successful homeowners.
Can I select my own lender?
Yes, as long as the lender is an accredited lender with competitive mortgage interest rates, and is willing to accept the downpayment loan as an eligible downpayment source.
Why is government launching this program?
This two-year pilot program has been high on our government’s priority list and it will give us a good foundation for moving forward if the program proves successful.
The Provincial Government recognizes the ability to save for a downpayment is one of the major challenges facing moderate-income families from homeownership.
The Downpayment Assistance Program was created in an effort to increase housing affordability for families and individuals who fall within low-to-moderate income household levels. The intent is to ensure households' province-wide will have an opportunity to avail of the pilot project.
How is the program being funded?
NLHC is investing $2.5M over two years for the Downpayment Assistance Program; however, no funding is required from Government.
The provision of assistance to first-time moderate income home buyers will be in the form of repayable loans which NLHC will finance.
Within Established Income Level and Established Home Value
Applicant Income = $47,000
Home to be purchased: $130,000 home in the community of Wesleyville
Required down payment: $6,500 (5% of purchase price of $130,000)
Loan Amount = $6,500 (5% of purchase price of $130,000)
Additional funds required = $0
Within Established Income Level, Home Above Maximum Purchase Price
(St. John’s Metro):
Applicant Income = $60,000
Home to be purchased: $275,000 home in the city of Mount Pearl
Required down payment: $13,750 (5% of $275,000)
Loan Amount = $12,500 (5% of maximum purchase price of $250,000)
Additional funds required = $1,250.
Exceeds Established Income Level, Home Above Maximum Purchase Price
(St. John’s Metro):
Applicant Income = $70,000
Home to be purchased: $275,000 home in the City of Mount Pearl
Required down payment: $13,750 (5% of $275,000)
Loan Amount $10,000 (Maximum loan of $12,500, less $2,500($500 for each $1000 over income limit)
Additional funds required = $3,750
Exceeds Established Income Level, Home Within Established Purchase Price
Applicant Income = $75,000
Home to be purchased: $200,000 home in the community of Clarenville
Required down payment: $10,000 (5% of $200,000)
Loan Amount $5,000 (Maximum Loan of $10,000, less $5,000($500 for each $1000 over income limit)
Additional funds required = $5,000
Inquiries can be made directly to:
Madonna Walsh -- (709) 724-3059 ([email protected])
Crystal Bradbury -- (709) 724-3226 ([email protected])
Rosanna Butler -- (709) 724-3126 ([email protected])
We believe the information contained in this article to be accurate. It is presented with the understanding that we are not engaged in rendering legal, accounting, or investment advice. When professional assistance is required, utilize the services of a licensed real estate broker, lawyer, accountant, or other consultant as may be required.
Navtaj Chandhoke can be your next key note speaker for real estate office meeting or Canadian real estate investment conventions, expos or trade shows. Please contact us for topics and availability.
Please contact us directly at [email protected] or 647-393-6100 to set up a session at your meeting or convention.
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