PEI Rent to own Program

Introduction

The Rent-to-Own Pilot Program in Prince Edward Island (PEI) is an innovative initiative aimed at helping residents with modest incomes achieve their dream of owning a home. This program is particularly designed for those who have faced challenges in securing mortgage financing and do not currently own a home.

Program Overview

The heart of this program lies in its ability to transform rental payments into a path towards home ownership. Eligible properties under this program must be valued at a maximum of $350,000 (including HST, if any), and should serve as the principal residence of the participant. It’s essential to note that this program does not cover new constructions, rental, seasonal, or recreational properties.

Eligibility Criteria

To qualify for the program, applicants must meet several criteria:

• Not currently owning a home.
• Evidence of being declined mortgage financing within the last six months.
• Residency in Prince Edward Island at the time of application.
• A satisfactory credit rating and no outstanding debts in the Province’s Central Default Registry.
• A total annual household income of $100,000 or less for families, or $65,000 or less for individual applicants.
• At least one applicant must be a Canadian citizen.

Application Process

Prospective participants begin by applying to Finance PEI, providing necessary documents like the Notice of Assessment, recent paystubs, and identification. The evaluation focuses on creditworthiness, income, and total debt service capacity, determining the maximum purchase price of the eligible home.

Property Identification and Purchase

Participants are recommended to work with a licensed realtor to identify an eligible home. Finance PEI plays a significant role in this stage, involving home inspections and possibly property appraisals. Once a property is chosen and the conditions met, Finance PEI will purchase the property, entering into a Rent-to-Own Agreement with the participant.

Rental Period and Financials

During the 5-year rental period, the participant pays rent based on a 25-year amortization period at a 5% interest rate. This arrangement includes a unique feature where 40% of the interest paid contributes to a Downpayment Credit, aiding in the eventual purchase.

Participants are responsible for utilities, maintenance, and improvements of the property.

Final Steps and Program Closure

At the end of the 5-year term, participants can exercise their Purchase Option, requiring them to secure mortgage financing to purchase the property from Finance PEI. If the Purchase Option is not exercised, participants must vacate the property.

Program Duration and Additional Information

Applications for the Rent-to-Own Program will be accepted until the allocated funds are fully committed or until November 30th, 2024. The program, backed by a $17,500,000 commitment from the Province, is administered by Finance PEI, a Provincial Crown Corporation.

Interested individuals can find more information and application forms at Finance PEI, 94 Euston Street 2nd Floor in Charlottetown, or online.

Conclusion

The Rent-to-Own Pilot Program in PEI represents a significant step towards making home ownership more accessible to those with modest incomes. By converting rent into an investment in their future home, participants are given a unique opportunity to break into the housing market, a move that is commendable and potentially transformative for many Islanders.