HALIFAX, Nova Scotia— Nova Scotia’s provincial government is cutting the minimum down payment for first-time homebuyers to 2% under a new affordability program that will be available exclusively through participating credit unions, a move that is drawing both praise and concern within the mortgage industry.
The program is aimed at helping younger buyers enter the housing market. Big banks and other major lenders are excluded, a decision that industry observers say may allow the province to more closely manage risk and oversee the rollout, according to Canadian Mortgage Professional.
To qualify, borrowers must have a minimum credit score of 630 and be a permanent resident, Canadian citizen or immigrant with an endorsement certificate. Applicants must also demonstrate they can handle higher payments under Canada’s mortgage stress test.
Purchase prices are capped at $570,000 in the Halifax Regional Municipality and the Municipality of East Hants, and $500,000 elsewhere in the province, the report stated.
Could Drive Surge in Business
The exclusive arrangement could drive a surge of business to Nova Scotia’s 18 credit unions, which collectively serve more than 144,000 members and are the only financial institution in 17 communities, according to the Canadian Credit Union Association.
David Clarke, a Nova Scotia mortgage broker, told Canadian Mortgage Professional that credit unions — some of which he described as “understaffed” — may face operational challenges if demand spikes quickly. He also warned that borrowers unfamiliar with credit unions may need additional guidance, particularly if interest rates differ from those offered by larger banks.
“I don’t know how they’re going to navigate this influx of people that are going to be only able to get mortgages from the credit union,” Clarke told Canadian Mortgage Professional, adding that confusion in real estate advertising could create friction in the early weeks of the program.
Nationally, credit unions accounted for 18% of originated mortgages in the first half of 2024, according to Canada Mortgage and Housing Corporation, a smaller share than major banks but a growing segment of the market.
Some Concern
Clarke said brokers generally view credit unions as important partners, but he expressed concern that if the province-backed loans prove more profitable, some institutions could shift focus away from niche products such as mini-home refinancing in favor of higher-margin, government-supported mortgages.
