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| Community Housing | Effective Date: March 1, 2015 |
| Topic: Investment in Affordable Housing | Replaces: |
| Subject: Homeownership | Policy No. I.10.2. |
The Homeownership program is a component of the Investment in Affordable Housing Program for Ontario which is 100% funded by the federal and provincial governments. The Homeownership component aims to assist low-to-moderate-income renter households to purchase affordable homes by providing down payment assistance in the form of a forgivable loan.
The Manitoulin-Sudbury District Services Board is committed to delivering the Homeownership component of the Investment in Affordable Housing program provided the funding for the program is provided by the provincial and federal governments. DSB Staff will prepare the Program Delivery and Fiscal Plan as required by the Ministry of Municipal Affairs and Housing.
The DSB will strive to ensure the program is delivered in a fair and equitable manner across the DSB entire jurisdiction where reasonably possible. The DSB will establish eligibility criteria based on applicants income and assets. The DSB will also establish a priority ranking system for all applications as they are received based on the Investment in Affordable Housing Program Guidelines and DSB priorities across all communities.
Homeownership is a down payment assistance component in the form of a forgivable loan.
All residents of the Manitoulin-Sudbury DSB catchment area can apply for the Homeownership Program by contacting any of the DSB offices or by completing the Homeownership Application Form and submitting it to any of the DSB offices.
To be eligible for down payment assistance, prospective purchasers must:
The purchase price of a home must not exceed the average resale price of $150,000.
Resale or new homes (including conversions from non-residential use that include a new home warranty) are eligible unit types under the Homeownership component.
Homes may be detached, semi-detached, town (condo and freehold), stacked homes, row houses, apartments, duplexes or other similar built forms as included in the Homeownership guidelines.
Homes must be modest in size, relative to community norms, in terms of floor area and amenities, as determined by the province and/or the DSB.
Home inspections are required for all resale homes and are strongly recommended for new homes.
Eligible client groups for Homeownership include, but are not limited to:
Purchasers approved under the Homeownership component will be required to complete education and training regarding home ownership including financial guidance around the up-front and on-going costs of homeownership and on the obligations and benefits of being a home owner.
The Canada Mortgage and Housing Corporation website has a number of tools, worksheets, calculators and guides to assist and inform interested home buyers. This information can be found at http://www.cmhc.ca/en/co/buho/index.cfm.
Funding is provided as a down payment assistance loan for eligible purchasers. Assistance is forgiven after a minimum of 20 years the affordability period for the Homeownership component.
The amount of down payment assistance for each eligible purchaser will be up to 10% or to a maximum of $15,000. Under exceptional circumstances, clients may be able to exceed the above policy with the approval of the CAO.
The DSB may choose to provide a top-up to down payment assistance from the Homeownership RLF for households with dependents. This is to provide additional support to potential purchasers who face more challenges to save for a down payment and who would need to spend more to buy a home with adequate space. Top-up funding amounts from an RLF would be determined by the SM, and would not count as part of the 10% average funding limit.
The DSB will provide down payment assistance to eligible purchasers at the time of closing on the purchase of the home; when a mortgage can be registered on title. Please note that funding may not be used for deposits toward future builds.
Repayment of the original down payment contribution must be made if the following situations occur while the Homeownership loan is outstanding:
Traditional interest will not be charged on the assistance. The original loan amount and the percentage share of the realized capital gains proportionate to the down payment assistance must be repaid in the above cases. For example, if the purchaser was assisted with 5% of the purchase price, the loan amount plus 5% of any capital gains/appreciation would have to be repaid.
If a unit is sold for less than the original purchase price, the difference between the down payment assistance and the depreciated amount will be repayable.
Amount payable = Loan – (original purchase price – resale price)
The DSB must be satisfied that the sale was at fair market value.
If a purchaser chooses to repay the down payment assistance without selling the home within the affordability period, the purchaser is still required to repay the proportionate percentage of any notional capital gain* as of the date of repayment.
Only the principal amount would have to be repaid in the event of the death of a homeowner prior to the expiry of the affordability period.
Repayments are to be made into the Homeownership Revolving Loan Fund (RLF) and redistributed under the Homeownership component in the DSB’s area.
If the new potential purchaser meets all of the Homeownership guidelines, then the loan can be transferred. The new purchaser must pay all legal fees associated with the transfer.
*Notional capital gains will be calculated based on the current fair market value of the home at the time of repayment of the loan. Fair market value shall be based on an independent appraisal which would be paid for by the homeowner.
In support of the Homeownership component, CMHC will recognize down payment assistance as owner’s equity in its underwriting evaluation.
The DSB will strive to ensure the program is delivered in a fair and equitable manner across the entire DSB jurisdiction where reasonably possible. However, the DSB will establish the following local priorities: