A new shared equity program aims to break down barriers and increase homeownership rates for Black families in Canada. The program provides funding and support to help 200 Black families in the Greater Toronto Area purchase their first home.

Key Takeaway

The BlackNorth Homeownership Bridge Program is the first of its kind in Canada. It provides a novel financing model and community partnerships to help Black families afford down payments and reduce mortgage costs. Early data projects the program could build $60-75 million in new Black household wealth over time.

Owning a home in Canada can seem out of reach for many hardworking Black families in Canada, even if they try to buy a house while holding a work permit. Home prices in hot markets like Toronto have skyrocketed, rising 28% year-over-year in February 2022. With an average price of $1.4 million in Toronto suburbs, the dream of homeownership fades for middle and low-income buyers.

For Black Canadians, systemic inequities create added hurdles on the road to homeownership. Census data shows Black homeownership lags far behind the national average. Just 48% of the Black population lived in an owned home in 2018, compared to 73% of the total population. This gap costs the Black community an estimated $100 billion in lost household wealth.

The reasons behind low Black homeownership stem from Canada’s history of racist policies and practices. As recently as the 1950s, homeowners used legal tactics to bar sales to Black buyers. Without the ability to build home equity over generations, many Black households today lack the finances to compete in frenzied housing markets.

The new BlackNorth Homeownership Bridge Program seeks to reverse this legacy. Announced on February 18, 2022, the initiative provides $10 million in federal funding and financing support from banks and credit unions. The program aims to help 200 Black families buy their first home in the GTA within four years.

How The Shared Equity Program Works

The novel funding model uses a two-mortgage system to reduce down payments and ongoing costs:

• First mortgage: This is a traditional mortgage with a bank or credit union, at normal market rates based on income and credit scores.
• Second “silent” mortgage: The BlackNorth Program provides a second mortgage to cover the remaining down payment costs. Applicants repay this mortgage after satisfying the primary mortgage.

Additional supports like financial literacy training and “sweat equity” help families qualify and manage homeownership long-term.

With pooled funding and wraparound services, the program opens the door to homeownership for Black professionals priced out of the GTA market. Target applicants earn $65,000 or more per year, enough to afford a typical mortgage but not enough for sky-high down payments.

Why Homeownership Matters

Owning a home is about more than just shelter. Homeownership provides stability and the ability to build equity and transfer wealth across generations.

For many Canadians, home equity has been a gateway to starting businesses, funding education, and securing a comfortable retirement. These opportunities have not been accessible for many Black families.

• “It would mean legacy. It would mean financial security. It would mean stability and it would mean something to pass on to my children,” said Regina Magambo, a Black single mother hoping to buy her first home through the program.
• “We know this program will uplift generations to come by enabling working Black families in the Greater Toronto Area. Through this program, families with household incomes from $65,000 can become homeowners and build home equity that can bring prosperity to future generations,” said Dahabo Ahmed-Omer, Executive Director of BlackNorth Initiative.

The social benefits of homeownership also extend into neighborhoods and communities. Families take pride in maintaining their property, get involved in local issues, and kids benefit from stability in school.

Did you know that according to a survey by Richard Morrison, over 80% of Bridge program participants said owning a home provided their children more access to quality schools and extracurricular activities?

Early projections estimate the program could generate $60-75 million in new Black household wealth. With community-wide impacts, it provides a model for programs across Canada to close the racial homeownership gap.

Challenges Remain

While a major step forward, the shared equity program alone will not eliminate systemic disparities in Canadian housing. Key challenges include:

• Limited funding means the program only helps 200 GTA families in its first phase. Far more families could benefit from similar support.
• Land use policies that restrict affordable dense housing in desirable areas. This constrains supply and drives up prices.
• Ongoing discrimination in mortgage lending, insurance, and the home search process.
• Lack of representation of Black professionals across real estate, construction, and city planning sectors.
  

Overcoming these barriers requires sustained public-private partnerships backed by better data on racially equitable housing outcomes. The Bridge program provides a blueprint – and for 200 lucky families in the GTA, a life-changing opportunity.

Q: What is the home shared equity program aimed at helping Black families in Canada?

A: The Home shared equity program is a strategy introduced by the federal government in 2019. It aims to make it easier for Black families in Canada to enter the housing market. This is done by working with builders, the Canada Mortgage and Housing corporation (CMHC), philanthropists, and other governments to help reduce the level of monthly mortgage payments.

Q: How does this home shared equity program work?

A: Through the program, the government offers a “shared equity mortgage”. With this, the government takes an equity ‘interest’ in the home, and the mortgage is provided at below-market interest rates. Thus, It would significantly lower the monthly mortgage payments, allowing for more affordable homeownership.

Q: Is there a limit on the annual household income to apply for this home program?

A: Yes, there may be a level of annual household income that applicants must not exceed to qualify for the program. This is aimed at focusing the support towards families who find it the most difficult to enter the homeownership path. For the specific number, it’s best to check the latest guidelines from the federal government or CMHC.

Q: How much money has been committed toward the home shared equity program?

A: In their 2019 budget announcement, the federal government announced that it had committed $10 million towards the program. This illustrates the federal government’s commitment to tackling housing affordability issues in Canada.

Q: How is the federal government building a different playbook to address anti-Black racism in the housing market?

A: The federal government is building a different playbook to address anti-Black racism in the housing market by working closely with the CMHC. This includes programs such as the home shared equity program that work towards increasing homeownership among Black families – a demographic that has historically faced significant hurdles in achieving the same.

Q: How can I find more information about the home shared equity program?

A: You can find more information on the CMHC website or the official federal government site. Also, updates about the program and other housing strategies are often announced via Facebook, LinkedIn, and other social media platforms.

Q: What is a ‘silent’ second mortgage?

A: A silent second mortgage, like the one provided by the program, is a second loan that is taken out on a home, which allows for a down payment or the purchase of a home. These ‘silent’ mortgages typically have below-market interest rates, making homeownership more affordable.

Q: Are home shared equity programs unique to Canada?

A: Home shared equity programs like this one are not solely found in Canada. Various other regions and countries also use similar forms of equity sharing to help citizens find affordable ownership paths, as these can offer immediate and tangible help to families in need.

Q: If the federal government has an interest in my home, will they control it?

A: While the government does have an interest in your home through the program, this does not imply that they control or make decisions about it. This interest is primarily a financial one, and it allows the government to share in the gains or losses in home equity with you.

Q: Will the home shared equity program help the housing market in Canada?

A: The Home Shared Equity Program is designed to help stabilize and bolster the housing market in Canada. By helping more families become homeowners, it increases demand and fosters a more inclusive market.