Exciting news for those in the market for their first home or condo! The federal 2019 budget was recently announced, which will make homeownership more affordable for those looking to attain their first mortgage. This “new, targeted support for first-time buyers” takes a look at both housing supply and affordability measures, and introduces a First-Time Home Buyer Incentive that is sure to help more buyers get their foot in the door.
Canada’s housing agency (CMHC) will contribute up to 10% of the purchase price of a home (for qualified buyers) in a shared equity mortgage, effectively lowering the mortgage amount with no additional interest or payments owed on that portion. More details are to be released in the fall but it is presumed the 10% shared equity portion would not require repayment until reselling the purchased home.
An example provided is based on a $400,000 home with a 5% down payment, a 10% ($40,000) CMHC shared equity mortgage, and a reduced mortgage of $340,000 (down from $380,000). This reduces cost of ownership in this example by $228/month.
To qualify, households will have to show a total income under $120,000, have 5% of the purchase price saved as a down payment, and not be acquiring a mortgage worth more than 4 times the household income.
For those buying new construction (like, a StreetSide condo!), the shared equity amount tops at 10% of the purchase price, whereas resale homes are only eligible for 5% (so if you needed another reason to buy a NEW condo, here it is!).
In addition to the shared equity mortgage, there will also be a $10,000 increase to the Home Buyer’s Plan RRSP withdrawal limit from $25,000 to $35,000 for both first-time home buyers or those buying alone after previously purchasing in a now-dissolved relationship.
More details will be released, but until then, start saving for a minimum 5% down payment if you’re hoping to take advantage of this incentive – being prepared to move forward when the incentive is first implemented is a great strategy to increase your chances of qualifying.
For more information on the details of this first-time home buyer’s incentive, click here
If you’re interested in looking at our move-in ready condos, visit our developments page here
Happy condo hunting!