Nova Scotia’s 2% Down Payment Program: What First-Time Homebuyers Need to Know

By Rob Lough, Broker/Owner at Century 21 Optimum Realty

Saving for a down payment has become one of the biggest hurdles for renters ready to buy a home in Nova Scotia. While many qualified buyers can comfortably afford monthly mortgage payments, coming up with the traditional 5% down payment on a 500,000 home means finding 25,000 in cash—a tough ask when rental costs keep climbing.

The Province of Nova Scotia has launched a pilot program designed to tackle exactly this problem. The First-time Homebuyers Program allows qualified buyers to purchase with just 2% down, backed by a provincial guarantee that protects lenders and eliminates the need for traditional mortgage default insurance.

How the 2% Down Payment Works

Under standard mortgage rules, first-time buyers need at least 5% down on homes up to 500,000, and 5% on the first 500,000 plus 10% on any amount above that, up to the maximum insurable price of 570,000. For a 500,000 purchase, that’s 25,000 out of pocket.

With this new program, the same buyer would need just 10,000.

The program applies to purchase prices up to 570,000 in the Halifax Regional Municipality and East Hants, and up to 500,000 in the rest of Nova Scotia. The Province acts as guarantor for the mortgage, covering up to 90% of any shortfall if the home must be resold for less than the outstanding mortgage balance after a default.

Mortgages are delivered through participating credit unions across Nova Scotia, administered by Atlantic Central. If you want help finding suitable properties under these price caps, you can start by browsing our current listings.

Who Qualifies for the Program

This isn’t a program for everyone—it’s targeted at buyers who are financially ready for homeownership but struggling with the upfront cash barrier.

Eligibility requirements include:

Must be a Nova Scotia resident and either a first-time homebuyer or someone who hasn’t owned a home in the last four years
Combined household income of 200,000 or less
Must pass the CMHC mortgage stress test to demonstrate ability to carry the mortgage
Minimum credit score of 630
Must be a Canadian citizen, permanent resident, or immigrant with a sponsorship letter from a Nova Scotia provincial immigration program
Common-law partners can apply together if they’ve lived together at least 12 months, or are newlyweds

The income cap and stress test requirement ensure that buyers can handle the monthly payments—this program tackles the savings gap, not long-term affordability. If you’re unsure whether you meet these criteria, a conversation with our team is a good first step—contact us anytime.

Financing Mechanics: No CMHC Insurance Required

One of the unique features of this program is that no separate mortgage default insurance is required, even though the down payment is well below the standard 20% threshold.

Normally, any mortgage with less than 20% down must carry CMHC insurance (or insurance from another approved provider), with the premium added to the mortgage amount or paid upfront. That premium can add thousands of dollars to the total cost.

Under the First-time Homebuyers Program, the Province’s guarantee effectively replaces that insurance layer. If a borrower defaults and the home sells for less than the mortgage balance, the Province covers 90% of the lender’s loss.

Key financing details:

Down payment: 2% from the buyer
Interest rate capped at prime plus 2% maximum
Administered through participating credit unions via Atlantic Central

This structure keeps costs down for buyers while protecting lenders from excessive risk. If you’d like guidance on how this compares to the traditional insured mortgage route, our buyer services can walk you through both options.

Real-World Example: Cash Needed to Close

Let’s compare what it takes to buy a 500,000 home under traditional financing versus this new program.

Traditional 5% Down:

Down payment required: 25,000
CMHC insurance premium (approximate): 19,000
Total mortgage amount: 494,000
Cash needed at closing: 25,000 plus legal fees and other closing costs

2% Down Payment Program:

Down payment required: 10,000
No mortgage insurance premium
Total mortgage amount: 490,000
Cash needed at closing: 10,000 plus legal fees and other closing costs

For a qualified buyer, that’s 15,000 less cash required upfront—potentially shaving months or years off the time it takes to save enough to buy your first home.

Why the Province Created This Program

The First-time Homebuyers Program is part of Nova Scotia’s broader Our Homes, Action for Housing plan, which the government says has exceeded all targets in its first two years and created conditions for more than 68,000 new housing units.

Housing starts are up 36% over the past two years, but the Province recognized that building more homes is only part of the solution. Many renters are “struggling to save the down payment to buy a new home,” according to the program announcement, even when they’re otherwise financially ready.

Atlantic Central, the organization administering the program on behalf of participating credit unions, describes the target group as people who are “capable, responsible and ready for homeownership, but who need the right support to take that next step.” If you want to understand how this fits into broader market trends, you can also explore our latest Nova Scotia market analyses.

Is This Program Right for You?

The 2% down payment option makes homeownership more accessible, but it’s not the right fit for every buyer. Here are a few things to consider:

This program works well if:

You have stable income and good credit but limited savings
You’re spending a significant portion of your income on rent and struggling to save
You can comfortably pass the mortgage stress test
You’re planning to stay in Nova Scotia long-term

You may want to explore other options if:

You’re close to saving a traditional 5% down payment
Your income exceeds 200,000 as a household
You don’t meet the residency or immigration requirements
You’re concerned about carrying a higher mortgage balance relative to your home’s value

It’s also worth noting that a smaller down payment means a larger mortgage, which translates to higher monthly payments and more interest paid over the life of the loan. Make sure you’re comfortable with the long-term commitment, and consider speaking with both your lender and a local REALTOR®—you can start with a no-obligation conversation with our team at C21 Optimum.

How to Apply

The First-time Homebuyers Program is delivered exclusively through participating credit unions in Nova Scotia. If you’re interested in applying, your first step is to connect with a participating credit union to discuss your eligibility and begin the pre-approval process.

As with any mortgage pre-approval, you’ll need to provide documentation of your income, employment, assets, debts, and credit history. The credit union will assess whether you meet the program’s requirements and can pass the stress test.

If you’d like support with the home search, offer strategy, and timelines that align with your financing approval, explore our buying resources and tips or reach out directly to get started with Century 21 Optimum Realty.