FIRST-TIME HOME BUYER INCENTIVE (Starting in Fall 2019)
This new measure is basically a shared equity program designed to reduce mortgage payments for first-time buyers with the minimum downpayment. The Canada Mortgage and Housing Corporation (CMHC) will provide 5% of the cost of an existing home, or 10% of a new home in what amounts to an interest-free loan that isn't payable until you sell the property. The extra encouragement to purchase a newly built home is expected to boost home construction and help address a housing shortage in many areas.
There are a few caveats. If your household income is more than $120,000, you aren't eligible for the program. And your total borrowed amount (including the incentive portion) can't be more than four times your household income. With a 5% downpayment and a household income of $120,000, the maximum purchase price would be approximately $505,000.
The program is expected to be launched this Fall. We're still waiting for some details on how the incentive is paid back, and how increases or decreases in equity will be handled. Stay tuned! In the meantime, I can certainly run some numbers to determine if this is something you, or someone you know, may want to take advantage of later this year.
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