What is HeadStart on a Home?
HeadStart on a Home (HeadStart) was announced by the Government of Saskatchewan in 2011 as a program to increase the availability of entry-level housing across the province of Saskatchewan. The objective of the program was to increase the available supply of entry-level homes in Saskatchewan by a minimum of 1,500 new homes in the first five years of the program by financing their construction.
Why was HeadStart on a Home introduced?
Due to the economic prosperity the Province was experiencing at the time the Program was launched many Municipalities expressed a need for more entry-level housing to help accommodate and attract a permanent workforce and their families to the Province.
As a result, the Government of Saskatchewan has conducted independent reviews of the housing supply and engaged stakeholders in the industry that confirmed the need for a Program to support the construction of entry level housing was a priority and an urgent need. Municipalities confirmed through various remarks at the SUMA Conference in February 2011 that the issue of housing was urgent and that the increase in the province’s population had made the availability of entry-level homes a priority to which would also help those looking to exit the rental market and purchase a home.
When was HeadStart on a Home introduced?
On March 28, 2011, the Honourable June Draude, Minister of Social Services, announced the Saskatchewan Advantage Housing Plan, a suite of programs to increase the availability of affordable housing in the province. HeadStart on a Home was one of these programs. The design of the program has been completed through public consultation with stakeholders across the province.
What is the Government‘s involvement?
Through the Saskatchewan Immigrant Investor Fund Inc. (SIIF), the Government of Saskatchewan committed federal funding of over $200 million to the Headstart program, this money was then reinvested almost 2.5 times to finance construction of entry level homes. Funding repayment began after the first five years. SIIF is a subsidiary of Crown Investments Corporation.
What are the guidelines of the Program?
- Fixed rate of 4%
- Minimum 10% equity requirement
- No pre-sales required
- Target price at or below the average MLS sale price in community
- Minimum 75% of homes must be owner-occupied, with the balance made available for rental purposes
What is 'entry-level' housing?
‘Entry-level’ is defined as homes included in the gap between social/affordable housing and market priced housing.
How does the Program increase the amount of entry-level homes in the province?
HeadStart provided secured loans to finance the construction of entry-level homes across Saskatchewan. The 10% equity requirement allowed Developers/Builders to leverage their available equity capital to build more units then they would have otherwise been able to finance. The ability to begin construction without upfront pre‐sales reduced upfront costs and delays in construction, keeping the new homes more affordable and meeting the urgent need for housing. Allowing up to 25% of the project to be sold for rental purposes provided flexibility necessary for projects to meet housing needs in high-growth communities with a need for multi-purpose projects.
Who is eligible to apply?
All Municipalities in the province were eligible to apply on behalf of Builders and Developers they felt offered the best projects for their communities.
Where do the funds come from?
The funding came from the Federal Government’s Federal Immigrant Investment Program over the first five years of the program and will be repaid to the Federal Government five years after it is received, during years 6-10 of the program. The Provincial Government has established the Saskatchewan Immigrant Investor Fund Inc. (SIIF) to receive and administer the federal funding.
What is Westcap Mgt.’s role?
Westcap Mgt. Ltd. is Saskatchewan‘s venture capital and private equity Fund Manager, specializing in the development, launch, and management of niche funds that address capital funding gaps in Saskatchewan. Westcap’s history and experience in delivering new funds and programs throughout Saskatchewan such as Golden Opportunities Fund Inc., working with immigrant investment funds, and specialized investment acumen is important to the success of the program.
The Government of Saskatchewan issued a competitive request for proposal to deliver the HeadStart on a Home Program. Westcap was selected as the best firm to deliver the Program.
What is the role of the Credit Unions?
HeadStart’s Credit Union ‘Community Champions’ have committed up to $10 million to offer down payment assistance loans for purchasers, this pool of funds is called the HeadStart Equity Builder ProgramTM:
Loans available for up to 5% of the purchase price
Repayable over 5 years
Attractive rate of Credit Union prime
Applicant must qualify under individual Credit Union guidelines
Applicant must intend to occupy the home
What is the HeadStart Equity Builder ProgramTM?
The HeadStart Equity Builder ProgramTM was a major commitment by Saskatchewan’s leading Credit Unions, of up to $10 million, toward down payment assistance for purchasers of new homes constructed under the HeadStart on a Home Program.
The Credit Unions provided loans for down payment assistance to a maximum of 5% of the purchase price of a HeadStart Home. The loan was repayable over 5 years at the floating interest rate at Credit Union prime. This program was approved by mortgage insurers CMHC (Canada Mortgage and Housing Corporation) and Genworth under their non-traditional down payment guidelines.
Why is this program important?
This program is complementary to, and enhances the objectives of, HeadStart on a Home because it allowed entry-level home purchasers to access down payment funding to move into home ownership. The ability to provide a down payment is widely identified as the most significant barrier to home ownership. The Headstart Equity Builder TM Program was flexible to fill gaps left by other down payment assistance programs.
How do Builders and Developers access the Program?
Municipalities applied to the Program on behalf of the Builder/Developer seeking financing for a new development. Municipalities were the first assessment of suitability of a project for their community and the ability of the project to fill a need for entry level housing within the community.
What is the role of Municipalities?
Municipalities applied for financing on behalf of projects put forward by builders and developers. The ultimate construction loan was with the Builder or Developer. One of the assessment criteria for projects was the level of engagement by the Municipality to make the project a success. Developers/Builders and Municipalities were encouraged to work together to develop creative and flexible plans that involve municipal support, and adaptive financial arrangements to ultimately bring housing to the community at accessible pricing levels.
What were the basic project assessment criteria?
Each project was evaluated on the following:
- Capacity of Developer/Builder – previous projects completed, financial condition of the developer, etc.
- Overall feasibility of the project – site plan, project description, overview cost of development, proposed sales pricing, sales strategy, etc.
- Municipality engagement – the support, involvement and incentive provided by the local Municipality
- Sales strategy – Developers/Builders must provide a sales plan
- Needs analysis – identify how the project is meeting a gap in the entry-level housing market
Will this Program compete with financial institutions?
HeadStart was designed to be a catalyst for entry-level housing construction. As such, the lending parameters were less restrictive than traditional lenders in order to encourage Developers/Builders to allocate increased resources to the entry-level home market. Traditional lenders would not typically have funded under these terms.
Is this Program offered anywhere else in Canada?
Headstart was a made-in-Saskatchewan solution to increase the availability of entry-level housing and there was no other Program similar to it in Canada.
Are there specific requirements for who will be eligible to buy HeadStart homes, e.g. income level restrictions?
Homes constructed under the HeadStart Program were available for purchase by anyone seeking entry level housing options, however, typically there were maximum income restrictions to qualify for the municipal support that coincided with the Headstart program.
Is Headstart on a Home still accepting applications from Developers and Municipalities?
All Headstart homes have now been sold and are occupied
Can purchasers still buy homes without a downpayment?
Yes! If a unit constructed under the HeadStart on a Home program has never been occupied then you can purchase without a downpayment through two options:
1. Certain developers are able to offer full and partial non-repayable downpayment grants to home buyers.
2. Homebuyers, accessing a mortgage through one of our Credit Union partners, can borrow the downpayment at Prime and pay it back over 5 years.
How effective was the Headstart on a Home program?
The Program has been called one of the most successful entry-level housing initiatives in the country. It funded construction of 2,224 homes, created more than 2,104 jobs and generated in excess of $686 million in economic activity.