What is shared equity housing?
A primary barrier for many aspiring to home ownership is accumulating a down payment. The gap between renting and ownership continues to grow as citizens struggle to save while paying steadily increasing everyday living expenses. Our shared equity housing model enables individuals to purchase a home without a down payment and for a reduced mortgage. Once you purchase you start building wealth through equity growth.
Shared equity ownership for housing is a financial model for sharing the cost of home purchase. Shared ownership through INHOUSE provides low to moderate earners the opportunity to become homeowners. By entering into a partnership with a housing organization like INHOUSE, individuals or families can enjoy the benefits of owning their own home with payments that fall within their means. Instead of paying increasingly high real estate market prices, especially in desirable inner city neighbourhoods, purchasers hold a mortgage for between 60-80% of the home’s full market value. The remaining amount of the full purchase price is contributed through a partnership with the developer and land owners.
Advantages to shared equity homeownership:
- Helps low to moderate income earners become homeowners
- Lower initial home price for purchasers
- Stabilizes residential neighbourhoods by promoting long term affordability and protecting property values
- Owner generates personal wealth from the equity held in their home
How does INHOUSE shared equity housing work?
If you qualify as an INHOUSE applicant, you will be approved for a mortgage for approximately 65% of the suites full market value. The remaining percentage is comprised of the deferred land value and developer’s equity. This is the shared equity component of our financial model and serves as the down payment on the mortgage.
Do I qualify?
To qualify for the program, applicants must not currently be homeowners and must be earning a moderate income with a household income no greater than the City’s median household income. Potential purchasers must also qualify for a 5-year CMHC insured mortgage and their net worth cannot exceed 25% of this mortgage.
Am I required to pay back or pay interest on this shared down payment?
As the financing model is built on shared-equity, owners participate fully in the equity opportunity and do not incur increased or deferred interest charges.
Are there any restrictions?
There is a time period restriction of 10 years on INHOUSE projects. During this time period, sales are managed by INHOUSE in order to minimize real estate fees and ensure the building remains in the shared equity portfolio. Suites cannot be rented or sold on the open market and must be owner occupied.
There is no time commitment to living at an INHOUSE project. Owners have no obligation to stay for a set period of time and can sell their suite through INHOUSE at any point. The homeowner owns a percentage of the suite when they purchase and when they sell, they receive that percentage of the new market price.
What happens after the 10 year restriction?
After the set time period, the shared equity partnership is dissolved and we work with you to refinance your mortgage for 100% of the equity or to help you sell the unit at market value. As you will be the sole owner, you will be able to rent or sell your suite without any of the previous restrictions after the ten years, when you are 100% owner.
Are there any other costs?
The building is operated as a Condominium Corporation and therefore owners are responsible for associated condo fees, which do not include their electricity and internet or cable usage. The building is professionally managed and has its own Board of Directors, with five owner representatives.
What involvement does the government have?
INHOUSE is a not-for-profit society and operates outside of government. However, we work closely with all orders of government, lending institutions, land owners and our development partner to develop shared equity housing programs in many different communities.
City involvement at McPherson Place?
The City of Calgary partnered with INHOUSE by providing a long term loan for the land acquisition. The City purchased 58 units in McPherson Place and the Calgary Housing Corporation includes these in their rental portfolio. The Calgary Housing tenants are part of the McPherson Place community and like all residents follow the buildings bylaw.