New First Time Buyer Incentives effective Sept 2019
The Liberal Government has announced their first time buyer initiative that they expect will take effect Sep 2019. We have limited details at this time on how the program will be laid out, but we will keep you updated as we learn more.
Introduction of the First-Time Home Buyer Incentive (FTHBI)
First time buyers would need to have their minimum 5% down payment. Then CMHC will provide an extra 5% of your down payment for the purchase of existing homes, or 10% for the purchase of a new build, reducing your mortgage balance
The mortgage must be default insured
Your income must be less than $120,000 (Also, mortgage plus incentive cannot be more than four times the participants’ household income)
No monthly payments are required, and this amount can be paid back at any time, or upon the sale of the house
The government expects 100,000 first-time buyers will take advantage of the program over the next 3 years at a cost of $1.25 billion
Program expected to be operational by September 2019
Example 1:
A borrower purchases a $400,000 home with a 5% down payment and a 5% 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.
Example 2:
A borrower purchases a $400,000 home with a 5% down payment, which works out to $20,000. You could receive up to $40,000 through CMHC. 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.
Increasing the RRSP Home Buyers’ withdrawal limit from $25,000 to $35,000
Permits two first-time buyers in the same household to combine withdrawals for up to a $70,000 down payment (An increase from the previous $50,000)
Available for first-time homebuyers. But as of 2020, this program is eligible for those who split from their spouse or common-law partner, even if they are not first-time buyers
The funds must be repaid within 15 years, or the withdrawal will have tax implications
The new limit would apply to HBP withdrawals made after March 19, 2019