The Enhanced Homebuyers Program: A Final Recap

Chances are, you’ve heard of us discussing the Enhanced Homebuyers Program. It’s a co-ownership model that will contribute anywhere from 5%-15% of the downpayment up to $250,000. The program is designed to help provide first time home buyers or move up buyers with the financial assistance and support they would need to own a home. Currently, the program is only interested in co-owning homes within the $550,000 to $2,500,000 range. If you haven’t already and have no idea what we’re talking about, we suggest checking out our previous blog post on this topic for an introduction and detailed breakdown.

As this is the final blog post of this series, we want to offer a straightforward yet detailed summary of the most important information we’ve gathered. We understand that a blog post isn’t everyone's cup of tea, and we’ve got you covered- check out the YouTube link here for a more interactive approach.

In Canada, the minimum down payment requirement are as follows:

5% for homes priced up to and including $500,000

10% for homes priced between $500,001 & $999,999

20% for homes priced at $1,000,000 and above

Since the program will contribute anywhere from 5%-15% of the down payment, it helps you to be able to afford a home that would otherwise be out of your financial reach. When it comes time to sell, the net proceeds after any outstanding balances have been paid will be split between the homeowner and the co-ownership program.

One of the major benefits of the EHBP is that it helps lower your monthly mortgage payments by increasing your down payment. The Santa Sells Houses Team understands that the process of buying a home is one of the most stressful and important decisions one can make and that’s why we’re so excited to share this program with you.

It’s important to note, that as the homeowner, you are required to keep the house maintained. While minor improvements can be made at your discretion, any major renovations must be approved by the program so you can receive any potential credit back.

EXAMPLE 1- $550,000

Let’s take a closer look at an example. Suppose you have a household income of $90,000 a year, a car payment of $400 a month, and are looking to buy a home priced at $550,000. With a traditional mortgage, you would need to have a 5.5% down payment of $30,250, and your monthly mortgage payment would be higher because you need to pay CMHC insurance, which protects the lender in the event you default on payments. Assuming a mortgage rate of 5%, your monthly payments would be $3,144 a month

When buying with the Enhanced Homebuyers Program, you only need to save up 5% of the purchase price for the down payment, which would be $27,500 in this example. The program would contribute an additional 15%, making your total down payment $110,000- a significantly larger sum than with a traditional mortgage. One of the benefits to this is that you no longer have to pay CMHC insurance because the down payment is at least 20%. Assuming a mortgage rate of 5%, you would only be paying monthly mortgage payments of $2,348.

This means you can save roughly $796 a month or $9,552 a year to put towards other expenses or to save.

Suppose you decided to end the agreement and sell after 5 years. If we assume a 3% appreciation rate year over year, the home’s value would now be $637,000. The remaining mortgage is paid off first, and the net proceeds are divided between the homeowner and the Enhanced Homebuyers Program. As a homeowner, you also receive any principal payments you made on the mortgage back to you in full.In this example, the homeowner would receive $46,134 from mortgage principal payments and also 25% equity of the sale, which is $85,648 $46,134 in mortgage principal, if you add this amount to the $9,552 per year you could save, it would help secure a down payment on your next mortgage.

It’s worth noting that besides selling the home, there’s another way to end the co-ownership agreement: by buying out the EHBP at any point in the agreement. If you happen to come across a lump sum of money, you could choose to pay back the other party's contribution and become the sole owner of the property. There are guidelines set in place, and the program has the option to accept, deny, or negotiate your offer.

Overall, It’s a great way to get into the market early and start owning your own home. If you’re interested in getting into the housing market but have financial obstacles, don’t hesitate to contact us and we can explore your options. Don’t forget to join the Locorum community today and start earning rewards on your home purchase. You're not just buying a home; you're investing in your future. Let Locorum and the Santa Sells Houses Real Estate Team help you make the most of it.

Check out this YouTube video link for more information.