PEI Down Payment Assistance Program
Prince Edward Island Down Payment Assistance Program (DPAP)
This is a provincial pilot program to help modest-income Islanders buy their first home. It’s designed to make that first down payment less of a mountain and more of a stepping stone. Essentially they cover your down payment in full, allowing you to buy a home sooner without needing to save up the down payment.
🔹 What you can get
• 5% of the home’s purchase price as a conditionally interest-free loan, up to $17,500 max.
• Loan proceeds must be used toward your down payment only.
• Fixed 5% interest accrues during the term but is forgiven once you fully repay the principal.
• First-year payments can sometimes be paused.
📋 Eligibility basics
✔ Citizen or permanent resident of Canada
✔ First-time homebuyer (or haven’t owned/occupied a home in the last 4 years)
✔ Total household income $110,000 or below (this limit can vary slightly by source)
✔ Home purchase price $350,000 or less
✔ The property must be on Prince Edward Island and your principal residence
✔ Must not be financially able to pay 5% down without assistance
How do you apply?
Follow this link and you can apply directly online!
https://www.princeedwardisland.ca/en/information/finance-pei/down-payment-assistance-program
How does the process work?
You apply online. Than someone from Finance PEI contacts you for some documents and reviews your file.
Once approved it is valid for 120 days. If you do not find a home within that time frame, and you still qualify, you can extend the approval for another 120 days.
Other Cost
You are still required to cover the closing cost. We roughly estimate that to be 1.5% of the purchase price.
Home cost $200,000 than your estimated closing cost would be $3000.
We always suggest calling around and quoting your lawyer to find the right fit and the best price!
Myths’ Surrounding the Down Payment Program!
💭 Myth #1: “It’s free money.”
Reality:
It’s a loan, not a grant.
You repay the principal. The interest is structured in a way that can be forgiven when repaid in full, but it is not a gift cheque from the province.
Translation: Helpful boost, not lottery win.
💭 Myth #2: “They’ll own part of my house.”
Reality:
No shared equity.
Unlike the old federal incentive that took a percentage of your home’s future value, the PEI program does not take ownership in your property. It’s a repayable second charge, not a silent partner.
💭 Myth #3: “If I qualify for a mortgage, I automatically qualify for this.”
Reality:
Nope. Different filters.
You must:
• Be under the household income cap
• Stay under the purchase price cap
• Prove you can’t reasonably come up with 5% on your own
• Be approved for an insured mortgage
It’s layered qualification.
💭 Myth #4: “It hurts my mortgage approval.”
Reality:
It doesn’t hurt it… but it does count.
Because it’s a repayable loan, lenders include the payment in your debt servicing. So yes, it affects ratios slightly.
But for many buyers, the trade-off is worth it because it gets them into the market sooner.
💭 Myth #5: “You don’t need any of your own money.”
Reality:
You still need skin in the game.
You typically still need:
• Some of your own contribution
• Closing costs (lawyer, adjustments, etc.)
• A 90-day bank statement trail
It’s assistance, not a full down payment replacement.
💭 Myth #6: “It’s only for people with bad credit.”
Reality:
Absolutely not.
You still need to qualify for an insured mortgage through CMHC or Sagen.
Credit standards still apply.
This program is about income and access, not weak credit.
💭 Myth #7: “It makes more sense to wait and save instead.”
Reality:
Sometimes yes. Sometimes no.
If home prices rise faster than someone can save, waiting can actually cost more than the small loan payment.
This is where strategy matters. Not emotion. Not fear. Math.