What You Need to Know: Canada’s First Time Homebuyer Incentive

More affordable housing for over 100,000 Canadians? CMHC, Canada Mortgage and Housing Corporation, has recently released a program, The First-Time Home Buyer Incentive, to help qualified first-time homebuyers reduce their monthly mortgage carrying costs without adding to their financial burdens.

What you need to know:

  • First time buyers making less than $120,000 per year are eligible
  • Borrower must put up the minimum down-payment amount which is 5%
  • Available for properties worth a maximum of about $565,000 (your total borrowing is limited to 4 times the qualifying income)
  • Incentive repayable over 25 years or when the property is sold, whichever comes first
  • Homebuyer can also repay the incentive in full at any time, without a prepayment penalty
  • Stakes from CMHC will be interest free
  • Available September 2nd, 2019

The program is offering up to a 10% contribution to new developments and 5% for resale homes. This ‘shared equity mortgage’ will aid buyer’s purchasing power significantly. A shared equity mortgage is where the government shares in the upside and downside of the property value. For example, you buy a property with a purchase price of $300,000 with a contribution of $15,000 from CMHC. If the home value increases to $400,000, the amount to pay back will increase to $20,000. Similarly, if the home value decreases to $250,000 the amount to repay will also decrease to $12,500.

Canadian citizens, permanent residents, and non-permanent residents who are legally authorized to work in Canada can apply for this program. If more than one person is going on title of the home, at least one of them must be a first-time home buyer. This includes borrowers that have never purchased a home before, borrowers that have gone through a breakdown of a marriage or common-law partnership (even if you don’t meet the other first-time home buyer requirements) or borrowers that did not occupy a home that they or their current spouse or common-law partner owned.

Overall this is a great option to increase purchasing power and lower buyer’s monthly payments by increasing the down-payment amount, interest free. Please contact me if you have any questions!

Information source: Government of Canada, CMHC Official Website





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