Pilot aims to lower cash barrier as affordability strains first-time buyers
Nova Scotia’s government is placing a new bet on first-time buyers, launching a four-year pilot that cuts the minimum downpayment on eligible mortgages to 2% and shifts much of the risk to the province.
Announced on February 3, the First-time Homebuyers Program reduces the required down from the usual 5% on homes up to $500,000 to 2% for qualifying borrowers, with participating credit unions delivering the loans under provincial guarantee.
Housing minister John White said the move responds directly to renters who watched ownership slip out of reach in a rapidly appreciating Halifax market.
“Nova Scotians told us that in today’s rental market, they are struggling to save the downpayment to buy a new home,” White said.
“This program is making it more affordable to come up with a downpayment and easier to make the dream of homeownership a reality.”
Credit unions carry a bigger role in risk
Under the pilot, buyers need a household income of $200,000 or less, a minimum credit score of 630 and have to pass the Canada Mortgage and Housing Corp. stress test.
Previous owners who were out of the market for at least four years could also qualify. Property values are capped at $570,000 in Halifax Regional Municipality and East Hants and $500,000 elsewhere in the province.
The province acts as guarantor on the mortgages, promising to cover 90% of any shortfall if a home sold for less than the outstanding balance after default.
Officials also said borrowers would not need separate mortgage insurance despite putting down less than 20%, and interest rates would be capped at prime plus 2%.
“This partnership with the Province of Nova Scotia reflects a shared recognition across the credit union system that there is a growing group of people who are capable, responsible and ready for homeownership, but who need the right support to take that next step,” Paul Masterson, president and CEO of Atlantic Central and League Savings and Mortgage, said.
“That is why Atlantic Central was proud to support the participating credit unions who were helping make this program a reality, because it aligned directly with who we were and what we existed to do.”
Dan Roberts, director of retail banking and member experience at East Coast Credit Union, said many renters already paid more in rent than they would as owners.
“We saw a huge need. We saw more people than ever that were actually paying higher rent than what their actual mortgage payment could technically be,” Roberts said.
New tool in an affordability squeeze
The pilot lands in a market that bucked the national cooling trend. While new home prices fell in many major centres between January and October 2025, Halifax recorded a 4.9% gain, the fastest rise in the country, as population growth outpaced new construction.
White acknowledged the program’s price caps would not reach every listing in downtown Halifax but argued that “outside of Halifax, $500,000 would easily get a first-time home.”
The upcoming wave of mortgage renewals at much higher rates, meanwhile, could bring even more supply to the housing market as homeowners simply opt to sell rather than grappling with higher costs.
“I think that affordability in 2026 and 2027 will further improve as some people will be forced to sell their homes – to access closer to 100% of the market value of their home, less selling costs – as opposed to refinancing a mortgage, on which we can only lend up to 80% of the appraised value of their home,” John Vo, a Dartmouth, Nova Scotia-based broker with Premiere Mortgage Centre, told Canadian Mortgage Professional.
The government also linked the the First-time Homebuyers Program to its broader housing plan, pointing to a 36% rise in housing starts over two years and conditions created for more than 68,000 new units.
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