New program features 2.5% fixed-rate loans for down payment support
The Yukon government has introduced a new downpayment loan program to help first-time homebuyers enter the housing market, offering low-interest loans to cover up to half the required downpayment on a home.
Premier Ranj Pillai announced the initiative Wednesday, saying that the goal is to support Yukoners looking to stay in the territory and to encourage others who left for school or training to return.
"If we are in a position where we have a lot of applications, we are definitely going to be waiting [for] folks that have received the Yukon Grant," Pillai said in a Press release. "And we're going to make sure that those folks are at the top of the pile so they can come back home… and bring back that skill set back to the Yukon."
The new program will replace the existing home ownership loan initiative and is expected to cost $1 million as part of Yukon’s 2025-26 budget. While it has not yet been passed in the legislature, Pillai said the government expects to accommodate between 40 and 80 residents through the initiative this year.
Eligible applicants must be first-time buyers with mortgage pre-approval and the financial ability to cover at least 50% of the required downpayment and closing costs. The loans will be available on a first-come, first-served basis, but priority will be given to those who previously received support through the Yukon Grant for post-secondary education.
The loan program offers fixed-rate financing at 2.5%, compounded annually. Unlike traditional loans, repayment can be deferred until the borrower has fully paid off their mortgage or sells the home.
To qualify, homes must be located within the Yukon and must serve as the buyer’s primary residence for the duration of the mortgage term. Additionally, the property must be priced at or below the average sale price for its category in Whitehorse.
Does Canada offer first-time buyer incentives?
Canada’s first-time home buyer incentive (FTHBI), which provided shared-equity loans, was officially discontinued in March 2024 due to low participation and restrictive eligibility criteria.
Instead, most first-time buyers turn to other first-time buyer programs, such as the First Home Savings Account (FHSA), which allows tax-deductible contributions and tax-free withdrawals for qualifying home purchases.
The RRSP Home Buyers’ Plan remains another common option, allowing withdrawals of up to $35,000 tax-free if repaid within the allotted timeframe. Additionally, the federal First-Time Home Buyer’s Tax Credit offers up to $1,500 as a non-refundable credit, and GST/HST rebates on new homes continue to offer upfront relief for qualifying purchases.
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