In November 2006 Vancity Credit Union, the largest in Canada outside Quebec, launched Springboard Mortgage, the latest in a long line of affordable homeownership programs. The goal of Springboard Mortgage is to help people living in non-profit, rental housing move on to homeownership, which helps that family directly and frees a non-profit housing unit for someone else in need.

By the fall of 2008, Vancity had approved 16 mortgages worth $2.8 million through the Springboard Mortgage program. 18 non profit homes have been vacated and 67 applicants have been pre-approved through the program.

Qualifying applicants usually purchase their homes in the Fraser Valley communities of the Lower Mainland or the Tri-Cities (Coquitlam, Port Coquitlam and Port Moody) area of suburban Vancouver, for prices ranging from $160,000 to $350,000. Most of the purchasers are low income families and single mothers.

To qualify for the Springboard Homeownership Program, applicants must be living in non-profit housing and have a low income. They must have verifiable employment or pension income and no rental arrears in the last two years. They are also required to take a Homeownership Readiness financial literacy course to ensure they fully understand the responsibilities of homeownership.

For qualifying applicants who agree to comply with Springboard’s requirements, Vancity provides a two-part loan that comprises 100 per cent of a home’s purchase price. One component is an interest-free loan to be paid back over 10 years. This serves as the 20 per cent down payment. The second component is a mortgage amortized over 25 years with a 10 year fixed interest rate, with interest only as the minimum payment.

After 10 years, says Tanya Hutchens, the purchaser will have repaid the “down payment” and can then negotiate a conventional mortgage for the principal amount outstanding. Under Springboard, Vancity does not dwell on an applicant’s credit rating, as long as applicants have no frauds or bankruptcies. Applicants must become members of Vancity. In addition, the borrower needs to understand that late loan or mortgage payments will immediately trigger foreclosure. Finally, they must find a home to purchase that is affordable according to Vancity’s guidelines. Under these guidelines:

• In order to ensure mortgage payments  are made on time each month, the  applicant’s estimated mortgage, loan,  property tax and strata fees payments  should be reflective of their current  rent payment plus 25%.
• The total of both loan and mortgage  cannot exceed $300,000, which is why  the program has been most successful  in suburban areas, where housing  prices are lower.
• The prospective buyer must take the  Homeownership Readiness course  delivered in partnership with the  Mennonite Central Committee. The  course content is based on earlier  development work done by Canada  Mortgage and Housing Corporation  (CMHC). Once applicants have  selected a home to purchase,  Vancity provides technical assistance.