*“As an Albertan in my late 20s — even making above the median salary — my savings have grown slower than the down payment on a house. I work as a product manager in IT and I’m able to put aside about $750 a month, which includes retirement savings. But that doesn’t even come close to covering how much the average down payment has increased in the past five years. Instead of getting closer to coming up with a down payment, I’m getting farther away. So I rent.” – Shwaikh (2023)*.
One of the difficulties for a growing number of Albertans is the ability to access affordable home ownership. Money set aside for a down payment is being swallowed by increasing house prices and the cost of living. So how do families overcome barriers such as down payments and high mortgage payments?
Habitat for Humanity provides a way for families to exit the rent cycle and to gain control over the future and to begin building equity. Our affordable home ownership program produces life change (listen to how our program changed the future for a family). With no down payment and an affordable mortgage, Habitat presents a way for families to move from rent to affordable home ownership. And, when they are ready, to move from the Habitat program into market home ownership.
Why is Habitat’s mortgage affordable?
- No down payment required
- Affordable mortgage payments are less than half of what a comparable house payment would be using traditional financing.
- Approximately 50% of the home price is financed with below market interest rates on a first mortgage.
- Approximately 50% of the home price is financed by Habitat with a 0% interest second mortgage with no repayment required for 20 years.
- A longer amortization period is available for the interest-bearing mortgage (30 years).
- Homeowners do not have to pay costly mortgage default insurance:
- Example: For a $300,000 home on the open market, the home buyer will pay approximately $11,400 in default insurance. This cost is added to the mortgage and is subject to interest charges.
- Where renting allows for zero equity growth, Habitat allows homeowners to create equity each month that grows through time. Homeowners are eligible to share in market appreciation on the home; if the market value of the home increases, homeowners share in the increased equity.
*Shwaikh, H. (2023-04-23). I’m priced out of the housing market. That’s a provincial election issue to me. article link .
The views and opinions expressed in the article are the views and opinions of the authors and do not necessarily reflect the position of Habitat for Humanity Edmonton.