New First-Time Home Buyer Incentive Unveiled!

By: Gloria Yeung

New First-Time Home Buyer Incentive Unveiled!

Tags: #HomeBuyerIncentive #FirstTimeHomeBuyers

New First-Time Home Buyer Incentive Unveiled!

The Canadian government released their new budget, in which they revealed that in order to help first time home buyers they are planning to pick up a portion of mortgage costs and increase the amount they can borrow.

That is the gist of the boldest proposal that Budget 2019 puts forth to help more middle-income Canadians fulfill their home ownership dream.

Under the new CMHC First-Time Home Buyer Incentive, the Canada Mortgage and Housing Corporation would use up to $1.25 billion over three years to help lower mortgage costs for eligible Canadians.

These incentives will be available for first time home buyers with a household income under $120,000 and on mortgages no more than four times their household income. First time buyers will also be able to withdraw $35,000 from their RRSP, up from the previous $25,000 limit.

For example, say you’re hoping to buy a $400,000 home with the minimum required five per cent down payment, which works out to $20,000. With the new incentive, you could receive up to $40,000 through the CMHC. Now, instead of taking out a $380,000 mortgage, you’d need to borrow only $340,000. This would lower your monthly mortgage bill from over $1,970 to less than $1,750.

The incentive would be 10 per cent for buyers purchasing a newly built home and 5 per cent for existing homes. Only households with an annual income under $120,000 would be able to participate in the program.

The government is hoping to have the program up and running by September.