Budget 2019 and Help for First Time Home Buyers
Budget 2019 announced a new First-Time Home Buyers Initiative (FTHBI) to assist first time home buyers and encourage the supply of new housing.
Under the new CMHC First-Time Home Buyer Incentive, the Canada Mortgage and Housing Corporation will use up to $1.25 billion over three years to help lower mortgage costs for eligible Canadians.
The Incentive would allow eligible first-time home buyers who have the minimum down payment for an insured mortgage to apply to finance a portion of their home purchase through a shared equity mortgage with Canada Mortgage and Housing Corporation (CMHC).
The money will go to first-time home buyers applying for insured mortgages with an annual household income of under $120,000. Borrowers will be required to pay a minimum of 5% of the home purchase price and will receive an incentive of up to 10% of the house price, which will lower the amount of their mortgage. The incentive is for 10% for buyers purchasing a newly built home and 5 % for existing homes. Home owners will eventually have to repay the incentive, possibly at re-sale, though details are still to be determined.
Applicants still have to qualify under the federal stress test, which ensures that borrowers will be able to keep up with their mortgage repayments even at higher interest rates.
More help for first time buyers is through the Home Buyer’s Plan (HBP), which currently allows first-time buyers to take out up to $25,000 from their RRSP to finance the purchase of a home, without having to pay tax on the withdrawal. The budget proposes raising that cap from $25,000 to $35,000.
To help more Canadians find a good, affordable place to live, Budget 2019 proposes to:
More details: Budget 2019 An Affordable Place to Call Home