Canadian First? B.C. Developer Trying to Sell Condos with $0 Down Payment Needed

The biggest roadblock to condo ownership for most young professionals is that daunting down payment.

In a historic move, a B.C. developer is pitching the idea of affordable condos with no money down. And housing experts aren’t exactly thrilled.

Located in the Vancouver suburb of Port Moody, The Strand condo project is expected to feature one-and two-bedroom units with mountain views and commercial space on the ground floor. Again, there would be no down payment.

Sounds like a dream, right?

The developer, Townline, hopes that the Canada Mortgage Housing Corporation (CMHC) will allow buyers to purchase units without making a down payment under its “”Flexibilities for Affordable Housing” program, which offers a variety of options for paying down a mortgage. These include options like allowing buyers to make down payments by performing labour, or by the good old-fashioned borrowing of cash.

“With the ever increasing financial challenges for the average British Columbian to access home ownership in a central, amenity rich, transit oriented, and family safe neighbourhood; Townline Homes has innovatively partnered with BC Housing, Canada Mortgage and Housing Corporation and TL Housing Solutions to offer a first of its kind AFFORDABLE HOME OWNERSHIP and 0% DOWN PAYMENT program,” the company says on their website.

If the housing authority grants approval, the purchase price of the property is discounted a minimum of 8 per cent below market value, then that 8 per cent is recognized by the CMHC as a down payment. With the approval of CMHC, a bank covers 100 per cent of the purchase price of the property; no second mortgage or vendor take back mortgage is required.

Photo: Townline

Of course, there are some restrictions. A family’s maximum income has to be at least $65,850 for a one-bedroom unit, or $92,430 for a two-bedroom home. Owners must also live in the home as a “principal residence” for at least two years before they can sell it, but would never have to pay back the eight per cent that was taken off the price.

The thing is, while the Towline website cites CMHC as a partner, the CMHC told Global News that the developer’s proposal is still under review.

“CMHC offers flexibilities for affordable housing… This is not the same thing as requiring no down payment,” said a statement from CMHC. “Otherwise CMHC has to pay the difference to the lender upon a default. … If there is a large price decline CMHC is in a first loss position.”

The proposal, however, is being supported by BC Housing, which will provide “low-cost construction financing” conditional on 90 per cent of The Strand’s units being sold before it’s built, as reported by Global News.

The timing of the proposal isn’t exactly ideal: Canadian household debt is reaching record highs (the ratio of household debt to disposable income jumped from 163 per cent to 164.6 per cent in the first and second quarters of last year), and financial experts continue to warn Canadians about borrowing too much money.

Presales for the units could begin as early as next month.