06/18/2019
Ottawa to help first time buyers lower mortgage payments
by Steve Randall | Jun 18, 2019
A new federal program designed to help middle class families get on the housing ladder is being introduced while the previously announced Shared Equity Mortgage Provider Fund will launch next month.
The federal government has announced that the First-Time Home Buyer Incentive will reduce monthly mortgage payments for first-time buyers without increasing their down payment.
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 existing homes, the incentive will be 5% while for new homes there will be a 5% or 10% option. The larger share available for new homes aims to boost housing supply.
The program will launch on September 2, 2019, with the first closing on November 1, 2019.
"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." said Bill Morneau, Minister of Finance.
The government has clarified that:
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.
