Why the P.E.I. government is putting up more money to cover down payments on houses

A government loan program aimed at helping first-time homebuyers cover their down payment is getting a half-million dollar top up, inresponse to strongdemand.

When the province launched the pilot program a year ago, it committed to handing out $1 million in loans.

Finance PEI says since then,between the 75 Islanders who'vealready been issued loans, and 50 more who've been pre-approved for them, that money is already accounted for.

"So we made the recommendation to treasury board, which was supported, to increase the pilot from $1 million to $1.5 million," said Jamie Aiken, CEO with Finance PEI."So I think that's a little bit of a testament to the program and how it's working, and hopefully will continue to work into the future."

The down payment assistance program was brought in as part of the previous Liberal government's Housing Action Plan.

First-time homebuyerswith a household income of $85,000 or less up from $80,000 when the program first launched can apply for an interest-free loan to cover the required 5 per centdown payment.

The purchase price on the home can't be any higher than $225,000.

75% buying in rural P.E.I.

With those criteria in place, P.E.I.'s Real Estate Association saidit's notsurprised to hear where successful loan applicants have been buying those homes, or at what price.

Finance PEIsaid75 per centof its loans have gone to Islanders buying homes in rural areas, with an average purchase price of $175,000.

"That's pretty much the way I called it," said Greg Lipton, the association's president. "Anything you can afford [at an$85,000 income] is not going to be in the city.It's going to be in a rural area."

Lipton saidwhile he's pleased to see the household incomecap recently increased to $85,000, he thinks it should beeven higher.

"I don't think at $95,000it's being unreasonable to say, 'yeah, we really can't save for the down payment,'" said Lipton. "I think we open it up a little bit, and we're going to get a lot more people through that are going to be able to afford their own home."

Finance PEIsays the pilot program will continue until March as is, and will then be reviewed.

"I would envision that hopefully this program stays for a considerable amount of time," said Aiken."If there's adjustments we could make in the future ... absolutely we'd like to look at those, and we'll continue to monitor the situation."

Opposition lukewarm on progress

P.E.I.'s Opposition Green Party said in a statement Thursday it's pleased to see more Islanders moving into home ownership, which it says will "hopefully help free up some rental spaces for others."

"However, this is a small part in addressing the housing crisis," the statementsaid. "Government has made very little effort to report on progress it has made on its Housing Action Plan. This makes it difficult for an assessment of the effectiveness of any of its efforts in this area."

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