Millennials feeling the I’ll-never-own-a-home-in-my-lifetime sentiment are getting a bit of help with one of the biggest purchases they will ever make. The new First-Time Home Buyers Incentive was announced recently in Barrie. Adam Vaughan, the Parliamentary Secretary to the Minister of Families, Children and Social Development announced the details.
The program kicks this September. Vaughan said during his announcement that $1.25 billion has been allocated for it over the next three years. To qualify for the incentive, you have to be a first-time homebuyer with qualified annual household incomes up to $120,000.
“Through the National Housing Strategy, more middle-class Canadians – and people working hard to join the middle class – will find safe, accessible and affordable homes. Our proposed measures will reduce the monthly mortgage for your first home by up to $286. This will help up to 100,000 families across Canada to buy their first home,” said Jean-Yves Duclos, Minister of Families, Children and Social Development and Minister Responsible for Canada Mortgage and Housing Corporation.
“The First Time Home-Buyer Incentive is designed to benefit those who need more assistance with housing costs, middle class Canadians. Thanks to mortgage payments that are more affordable, many families will have hundreds of dollars more each month in their pockets – money to spend on things like healthy food, sports activities for their kids, or even save for the future.” – Adam Vaughan, Parliamentary Secretary to the Minister of Families, Children and Social Development
Quick Facts about the First Time Homebuyer Incentive
- Canada’s First-Time Home Buyer Incentive will help qualified first-time homebuyers purchase their first home as the incentive reduces their monthly mortgage payment, without increasing the amount that they must save for a down payment. The program will launch on September 2, 2019, with the first closing on November 1, 2019.
- The incentive will allow eligible first-time homebuyers who have the minimum down payment for an insured mortgage with CMHC, Genworth or Canada Guaranty, to apply to finance a portion of their home purchase through a form of shared equity mortgage with the Government of Canada.
- For the purchase of an existing home, an incentive amount of 5 percent may be available. For the purchase of a newly constructed home, an incentive amount of 5 percent or 10 percent may be available.
- Doubling the incentive for purchasers of new homes encourages new housing supply.
- No on-going repayments are required, the incentive is not interest bearing, and the borrower can repay the incentive at any time without a pre-payment penalty.
- The government shares in the upside and downside of the change in the property value.
- The buyer must repay the incentive after 25 years, or if the property is sold.
- The incentive will be available to first-time homebuyers with qualified annual household incomes up to $120,000. At the same time, a participant’s insured mortgage and the incentive amount cannot be greater than four times the participant’s qualified annual household income.
- Per the table below, for a family buying a $500,000 home, this program could save them as much as $286 per month or more than $3,430 a year (note: for illustration purposes only, results subject to change depending upon amortization, interest rate, term, etc.).