What the New Federal Budget Could Mean for First-Time Home-Buyers

There have long been programs that have helped first-time home buyers get into the market.  Now, with the housing market of the last few years seemingly pricing out new home buyers (millennials, entrepreneurs in their 30’s, etc.) “Budget 2019” has offered what seems like a few lifelines to Canadians looking to purchase their first home or property.

Don’t think you can afford to buy a home? Well now, the Canadian government just may be able to help front some of the costs to get that first purchase off the ground.

As part of the plan, the Canada Mortgage and Housing Corporation (CMHC) First-Time Home Buyer Incentive would use up to $1.25 billion over three years to help lower mortgage costs for eligible Canadians. Just who are these Canadians that the incentive will help?

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. As such, the amount of the insured mortgage plus the CMHC incentive would be capped at four times the home buyers’ annual incomes, or up to $480,000. Therefore, the only homes/properties.

Borrowers would still have to put up a down payment of at least five per cent of the home purchase price. On top of that, though, they would receive an incentive of up to 10 per cent of the house price, which would lower the amount of their mortgage. What is now known as well, is that the CMHC would then also act as a “partner” of sorts on the deal.

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. In this case as well, the CMCH would then also assume 10% ownership of the property and, once the sale of this home was to take place, that 10% would then be repaid at the value of the home at time of sale, not purchase.

Another potential boon for First-Time homebuyers is the enhancement of the Home Buyer’s Plan (HBP), which currently allows first-time buyers to take out up to $25,000 from their registered retirement savings plan (RRSP) to finance the purchase of a home, without having to pay tax on the withdrawal. The budget proposes raising that cap to $35,000 with the new limit applying to withdrawals made after March 19th of this year.

Let me help you. Feel free to get in touch with ME anytime and I’ll be happy to get you on your way to a mortgage/loan that’s right for you and your loved ones.