There’s a new First-Time Home Buyer Incentive
The new First-Time Home Buyer Incentive program is a $1.3 billion investment that is expected to be operational by September 2019. The program would allow first-time home buyers to lower their monthly payments by sharing the cost of the mortgage with the government. The Incentive would provide funding of 5 or 10 per cent of the home purchase price.
Here’s an example from the government on how the program could work. If a borrower buys a new $400,000 home with a 5% down payment ($20,000) and a 5% Canada Mortgage and Housing Corporation (CMHC) shared equity mortgage ($20,000), the size of the borrower’s insured mortgage would be reduced from $380,000 to $360,000, helping to lower the borrower’s monthly mortgage bill.
CMHC would offer qualified first-time home buyers a 10% shared equity mortgage for a newly-constructed home or a 5% shared equity mortgage for an existing home. The larger shared equity mortgage for newly-constructed homes is seen as a way for the government to help encourage the home construction needed to address some of the housing supply shortages in Canada, particularly in the larger cities.
Qualified first-time home buyers are described as those with household incomes of under $120,000 per year who are trying to buy a home that is no more than four times their annual household income (including their insured mortgage and the Incentive amount). That’s first-time home buyers trying to buy a home valued at less than $480,000.
A quick search on Paragon revealed 1,300 properties available in the Fraser Valley for less than $480,000 on March 20, 2019.
The First-Time Home Buyer Incentive fund would be administered by the CMHC, utilizing $1.25 billion in funds over three years. Terms and conditions will be released in the coming months and the program is expected to be operational by September 2019.