TOP 6 THINGS YOU NEED TO KNOW
On Tuesday, March 19, the federal government announced a new incentive for first-time homebuyers. Often when these things are announced they are delivered in a way that is hard for people to consume, so we thought we’d help.
Read on for the answers to your top 6 questions on this new plan.
WHAT IS THE GIST?
This plan helps first time home buyers get financing, as the government or Canada Mortgage and Housing Corp (CMHC) will loan you up to 10 percent of the total purchase price of your first home. For example, if you wanted to buy a home for $200,000, under this program you would only have a mortgage of $180,000. You are responsible for paying this value back when your home sells. At this time there is no information about other repayment options. This helps first time home buyers, by enabling them to take out smaller mortgages and therefore keep their monthly payments lower.
WHO IS IMPLEMENTING THIS?
The program will be implemented through Canada Mortgage and Housing Corp (CMHC). You may have heard of these guys, they’re the ones who will ensure mortgages that have under 20% down. The new incentive is only for CMHC insured mortgages (i.e. if your downpayment is 20% or higher you don’t qualify)
OK, DO I QUALIFY?
To qualify for the incentive the following must be true:
- You have a household income of less than $120,000
- You are purchasing a home with less than 20% down
- Your mortgage is below 4 times your annual income (i.e. if you make $100,000 per year your mortgage is capped at $400,000)
HOW MUCH DO I QUALIFY FOR?
Yes! The incentive is 10 percent for buyers purchasing a new build home and 5 percent for pre-existing homes. See how this breaks down in our chart below:
IS THIS MONEY INTEREST-FREE?
WHEN IS THIS PROGRAM BEING IMPLEMENTED?
It is anticipated that this program will be implemented in the fall of this year. We’ll work to keep you in the know on any updates.