Not so fast: the “no down payment” condo project being reported has not yet been given the go-ahead by CMHC, according to the Crown Corporation.
The Globe and Mail recently ran an article about Strand condominium project by Townline in Port Moody, which is reportedly working with CMHC to offer units to buyers who aren’t required to put down a down payment.
The program has not yet been given the go-ahead by the Crown Corporation.
“The proposal is still under review,” Jonathan Rotondo, senior media relations officer with CMHC, told MortgageBrokerNews.ca.
CMHC typically requires a 5% down payment for buyers to qualify for mortgage insurance. However, according to the report, the developer, Townline Homes, is working with CMHC and BC housing to allow buyers to purchase a unit with no money down.
However, that may not be entirely accurate.
“Essentially, the developer is selling the property at approximately 8% below market value to homebuyers that are able to income qualify for the mortgage. The 8% is considered down payment / equity by CMHC as part of their affordable housing initiatives,” Jason Henneberry, a broker with Verico
MortgagePal Inc. in B.C., told MortgageBrokerNews.ca. “This approach differs from the flexible down payment program where qualified homebuyers are eligible to borrow their down payment via line of credit or personal loan.”
And that was confirmed by CMHC.
"CMHC offers Flexibilities for Affordable Housing (Homeowner Mortgage Loan Insurance). Under this program, CMHC will accept a broader range of down payment sources -- that means alternatives to cash from borrowers (borrowers being homebuyers),” Rotondo wrote in a followup email to MortgageBrokerNews.ca. “This could include sweat equity, grants, borrowed down payments or rent-to-own payments. This is not the same thing as requiring no down payment.”
MortgageBrokerNews.ca will follow the story to see if – and when – the proposed program gets the go-ahead from the Crown Corporation.