From revitalizing languages to launching food justice initiatives reclaiming traditional harvesting and preservation methods, First Nations people are doing the groundbreaking work of re-opening trails and forging new paths. For many on the journey to home ownership on reserve, the First Nations Market Housing Fund (FNMHF) removes barriers by offering access to the pathways already walked by current homeowners. Here are ten steps you can take to homeownership, supported by the Fund’s expertise and services.
1 – Setting goals
At the outset of any project, we usually know what we’re driving towards. Whether it’s making a stew or replacing an old appliance, it’s clear what the goal is. But, it can be very overwhelming when we consider the steps to get there, like pulling carrots, getting a ride to the store to buy flour, researching appliance brands, or searching used appliance listings.
Before getting bogged down by details, it can be helpful to develop a realistic goal for your home. Maybe you want to own a home that better suits your needs or buy your first home. Some things to consider include how much money you’ll need to save up, how long that will take, and the resources available. That’s where the Fund and our partners can become a part of your planning.
2 – Tabling your priorities
A Nation’s membership is everything to its decision-making. Members are the body and spirit of the community, bringing their values and interests to building shared priorities.
Most communities have competing urgent priorities, and they’re all tied to housing. A previous blog post about housing and wellness shared that housing is a determinant of socioeconomic health, and living in community can support connection to culture and land. Indigenous-led and sustainable economic development relies on an adequately housed community, and in many cases, economic projects include added infrastructure that serves those living on reserve.
Your Band needs to be a member for you to benefit from the Fund’s services. Click here to see if your First Nation has signed up with the Fund. If your Band isn’t already a member, your vocal and written advocacy can encourage them to sign up and open the door for other community members’ homeownership.
3 – Accessing support for homeownership
The Fund meets Nations where they’re at, providing training, advice, and coaching to improve market-based housing skills for some First Nations and members as the Nations work towards eligibility for credit enhancement. Your community may be working towards this goal or already have support from the Fund to back housing loans from approved banks or credit unions.
Your Nation’s housing department can tell you which homeownership programs are offered to members, including those from other organizations. Capacity Development services from the Fund could include financial counselling support to help you access a loan to meet your goals or homeownership-related workshops. In this step, you’re looking for support to start your journey.
Step 9 outlines why you’ll need tax documents for your journey. If you’re not current on your taxes or have a backlog, it’s a good idea to start working on that now.
4 – Building your homeownership capacity
Committing some time to counselling or workshops would help you build an idea of the big picture and the steps it will take to reach your goals. If you’re working in partnership with someone else, it’s important that you both know what lies ahead to align on what sacrifices or decisions you’ll make to get there.
There’s no exact roadmap because there are many pathways to building or buying a home, and people have different needs, considerations, and environments. However, you can start building a checklist of what you’ll need to do and get an idea of how long it will take.
If you’re not already living in your home or will need to live elsewhere during renovations, budgets need to reflect housing costs. You may also need to pay movers or rent a truck.
5 – Preparing for the costs
If you’re building or buying your home, your Nation’s housing department can help you with a list of up-front expenses to expect, like appraisals, home inspections, and any fees associated with getting your mortgage. As a new homeowner, some expenses that may have been covered as a renter may be new to you. Lawn and garden care, the hot water tank, and snow removal will be under your care. About a third of First Nations are also charging property taxes that would be a part of your monthly expenses.
The locks of your home will need to be changed and there may be charges to set up or move cable, internet, phone, hydro, gas, or water services. They probably list those on their websites, or you could inquire by phone.
You’ll need to know how much your homeownership project might cost, how much you can invest at the outset, and how much you can contribute to a payment every month. Your Band’s housing department may be a useful resource in getting a cost quote for building a home or finding a contractor. The listing agent or homeowners of an existing home can let you know what their asking price is.
The Fund has put together a list of resources and tools to learn about and do financial planning. The mortgage affordability calculator from lending partner BMO lets you input numbers and costs to see what your monthly payments would be and how much interest you’d pay over some time using a sliding scale.
To avoid additional insurance costs, a minimum down payment of 20% is required by Canadian law.
6 – Preparing for surprises
Homes are full of surprises that could include leaks, infestations, and mould. They may also require urgent updates as windows stop working or a furnace needs to be replaced. Construction quotes can be affected by delays or changes to the cost of labour and materials.
Beyond the expected costs of buying a home, the Canada Mortgage and Housing Corporation (CMHC) recommends saving five per cent of your income every year so you’ll be prepared to deal with unexpected expenses.
7 – Getting a credit check
Canada has two credit bureaus, Equifax and TransUnion, to provide you with a free credit score. Your score helps potential lenders understand if and how to structure your loan.
Even if you’ve had financial setbacks in the past, you can still work toward improving that score while you save up for your home. It may be as simple as putting more expenses on your card and paying it off in full every month, creating a paper trail that you’re a reliable investment. This blog entry has more information about achieving financial empowerment.
8 – Re-assessing your goals and planning
Adjustments to your end goals may be necessary at this point. There may be some creative ways to get more financial support for your project, like planning to rent a room or sharing a home with someone else. Either way, you’re hopefully looking at a payment amount and a timeframe for when you could expect to have it saved. You’re way ahead if you’ve already saved what you need to pay off a mortgage or loan in a reasonable amount of time. Most people will need to reconsider their budget and plan how to save up.
9 – Gathering your documentation
Just like a job application, you don’t need everything on the list to qualify for a mortgage. It’s more of a wish list of what lenders would like to see, except your tax records.
For example, getting approved for a loan is traditionally more challenging when you’re self-employed, as you have no pay stubs or letters of employment. However, the FNMHF works with lending partners to build an understanding of working with First Nations entrepreneurs.
Here are the documents lenders will want to see:
- Your T1 tax forms and Notices of Assessment from the Canada Revenue Agency (CRA) over the past two years.
- Two recent pay stubs.
- A job letter from your employer’s HR department, prepared within the last 30 days.
- A 90-day history of the funds you’ve saved (or were gifted) for investing in your home.
10 – Making your move
The work you’ve put into building financial knowledge and capacity to own a home is an overall benefit to your financial future. With your finances mapped out, your documentation in order, and realistic goals, you’re ready to engage with a lender through your Band’s housing department. Congratulations on building your home or putting in an offer!