Program to offer loans of up to $18,000

A new Yukon Housing Corp. program could help first-time home buyers come up with a down payment.

A new Yukon Housing Corp. program could help first-time home buyers come up with a down payment.

NDP housing critic Kate White, however, says it doesn’t go far enough in addressing the housing issues facing the territory.

Scott Kent, the minister responsible for the housing corporation, announced the Down Payment Assistance Program on Tuesday afternoon.

It will provide those approved for a mortgage with up to $18,000 for a down payment on a home. On a $365,000 acquisition, the $18,000 would represent five per cent of the purchase price.

The program is available to those with an annual income of up to $90,000.

Applicants must also provide a minimum 2.5 per cent of the purchase price and meet with a housing corporation mortgage advisor to discuss the responsibilities of home ownership and budgets.

On a $365,000 home, the minimum 2.5 per cent would be $9,125, for a total downpayment of $27,125.

Applicants are able to use the national program where they can borrow against their RRSPs provided they pay back that amount in 15 years.

The loan from the housing corporation would also be for up to 15 years with a more flexible payback program of interest-only payments for the first five years. It would be registered as a second mortgage on the property, Kent said.

During a press conference held Tuesday, he said the program’s goal is to assist those who are unable to save up for a full down payment because of the amount of rent they’re paying.

“Saving for a down payment is one of the key barriers to home ownership,” Kent said.

“Helping people move into their own homes will also create more available units in the rental market.”

The new program is being introduced after the housing corporation had a consultant look at the housing market last year. The $365,000 price tag was determined to be the range that would enable residents to stay within the existing prices.

Housing corporation president Pam Hine said the education component of the program will see the applicant meet with a Yukon Housing mortgage advisor.

That’s aimed at ensuring prospective homeowners know what they are getting into so there are no defaults on the loan.

“We, obviously, want our clients to be successful,” Hine said, noting the mortgage funding will have to be approved before the loan is made.

The banks will also factor in the amount of the loan when calculating how much mortgage an applicant will be eligible for. That equation looks at how much debt load a person may carry.

Anyone borrowing under the program who may decide to sell in the future must pay out the principal and interest owed on the loan.

Hine said officials have worked closely with banks on the program.

A total of $1 million has been earmarked for the program, Hine said. Both she and Kent noted Yukoners’ uptake will be monitored and budgets adjusted accordingly after the first year.

White, meanwhile, said Tuesday afternoon she is pleased to see the government taking an idea originally proposed by the Yukon Anti-Poverty Coalition, then adopted by the NDP for its 2011 election campaign.

However, she said, the government appears to be taking an ad-hoc approach to the whole housing issue.

The government is arguing there may be a trickle-down effect in that more rental units will be opened up as those renting homes opt to buy.

However, issues remain around the Landlord and Tenant Act even after last year’s changes to it, White said.

The new regulations, for example, still allow for eviction without cause, she pointed out.

Val Smith, the president of the Yukon Real Estate Association, said today that while the new venture’s effect remains to be seen, it appears to be a beneficial program.

“It’s not a give-away,” she said, noting that was her initial concern with it.

As she pointed out the applicants must still qualify for a bank mortgage and show they can meet the 2.5 per cent obligation.

There are a number of people, she said, who are essentially paying more than a mortgage with their rent. Those obligations make it difficult to save up a full down payment of at least five per cent of the purchase price.

And while the $365,000 won’t get a buyer a new single-family home, she said there are options out there in that price range.

Those choices in Whitehorse typically range from older single family homes (which may need work) in established neighbourhoods to attached homes like townhouses and condominiums in newer, higher-density neighbourhoods which have smaller lots.

“I think this is a really good step,” Smith said.

“The Yukon Housing Corporation is in place to support the housing needs of Yukoners,” said board chair Claire Derome.

“We will continue to identify and implement innovative housing solutions that work for Yukon people.”

Program information is available online at http://www.housing.yk.ca/; by phone at 667-5759 or, for those outside Whitehorse, 1-800-661-0408 extension 5759; or at the housing corporation’s offices at 410 Jarvis St.