The province’s new program lets eligible first-time buyers purchase with just two per cent down through select credit unions, but brokers warn the trade-offs could limit flexibility and increase long-term costs.

Nova Scotia’s new pilot program to help first-time homebuyers enter the housing market is drawing national attention, as industry experts assess how the initiative intersects with federal mortgage insurance rules and whether it could work beyond the province.

The program, announced last week, is being offered through participating credit unions and allows eligible buyers to purchase a home with as little as a two per cent down payment. Nova Scotia will assume the part of the risk typically covered by mortgage insurers.

While the initiative is intended to improve access to homeownership, industry observers say the pilot’s wider, long-term impact will depend on borrower risk, lender participation, and federal insurer support.

“I like the idea of more people getting into the marketplace and having a lower down payment,” Clinton Wilkins, principal broker at the Halifax, N.S.-based Clinton Wilkins Mortgage Team, told Canadian Mortgage Trends. “But the concern for me is if you’re only putting down two per cent, do you have no other resources? What happens if something goes wrong in the home as well? There’s no fallback position.”

Under the pilot, eligible applicants must have a household income below $200,000, a minimum credit score of 630, and meet standard stress-test requirements.

The program applies to owner-occupied homes priced up to $570,000 in Halifax Regional Municipality and East Hants, and $500,000 elsewhere in the province. Loans issued under the pilot are not insured by federal agencies. Instead, the province provides a deficiency guarantee in place of traditional mortgage insurance.

Because the provincial guarantee is tied to participating credit unions and is not transferable, borrowers would generally need to build at least 20% equity before refinancing or moving the mortgage to another lender.

Concerns about flexibility and long-term costs

Some brokers say those conditions could limit borrowers’ flexibility and increase their long-term borrowing costs.

“The cost of borrowing from a credit union in Nova Scotia is typically one to two per cent higher than we would get from another prime lender,” Wilkins says. “If you’re only putting down two per cent and have no high-ratio insurance, you’re going to be stuck with that credit union likely for five, 10, or 15 years.”

Wilkins says the program could be more beneficial in rural parts of the province, where credit unions often play a larger role in mortgage lending and access to traditional bank branches, and brokers are more limited.

He noted that in those markets, the initiative could help expand homeownership opportunities for buyers who may otherwise face fewer financing options. By contrast, he said the program could negatively impact Halifax’s already competitive housing market.

“The average price point in Halifax is over $600,000,” Wilkins said. “I fear that it may put some additional stress on that sub-$570,000 price point.”

Could the model go national?

Others say the program’s broader impact will depend on how well it aligns with federal mortgage insurance rules and provincial housing policy.

Leigh Graham, a Kingston, Ont.- based broker and partner at The Mortgage Professionals, says the pilot program highlights the complexity of coordinating provincial affordability initiatives with federal lending frameworks. “When somebody’s buying with less than 20% down and they need the government insurance, the insurance factor is still a federal matter,” Graham says.

However, if a government insurer like Canada Mortgage and Housing Corporation decides the program is viable, Graham says there’s no reason it couldn’t or shouldn’t spread across the country. It would just depend on how lenders engage with the program at a provincial level.

Graham notes that down payment requirements are only one part of the affordability equation. “Qualification remains the single largest challenge,” he says. “Starter home prices in many Ontario markets are much higher than what average incomes will allow.”

Implications for consumer choice

Given the Nova Scotia pilot’s limitation to 14 specific credit unions, Graham cautions that the structure could restrict consumer choice. “It could end up being a potentially proprietary program for specific lenders,” he says. “That could be challenging for a consumer.”

Michelle Drover, vice-president at Halifax-based Premiere Mortgage Centre, says buyers who enter the pilot through credit unions may face significant constraints when their terms expire. “If somebody takes this product with the credit union, they have no equity,” Drover said. “When the mortgage comes up for renewal, where are they going to switch it? They can’t transfer it to an insured lender because it’s not insured.”

She said limited mobility can weaken borrowers’ negotiating power over time. “We’re in this industry because we’re advocates for our clients,” she said. “We want to ensure that they have options available to them.”

Drover added that first-time buyers should carefully compare the pilot with other available programs before committing. “Go with your eyes wide open and look at all of the options available to you,” she said. “[This] looks pretty, but when you unwrap it, it’s not very pretty inside.”

Written by Andrew Seale, Mortgage Industry News, February 12, 2026 and sourced from Canadian Mortage Trends.