Federal Budget 2019 - Real Estate News
CMHC First-Time Home Buyers Incentive Plan was announced on Tuesday which would give eligible first-time home buyers the ability to lower their borrowing costs by sharing the cost of buying a home with CMHC.
Support for First-Time Home Buyers
- The government has budgeted up to $1.25 billion over the next three years to support this incentive. It is expected that approximately 100,000 first-time home buyers would be able to benefit from the incentive over the next three years.
- Eligible first-time home buyers who have the minimum down payment for an insured 5% mortgage can apply to finance a portion of their home purchase through a shared equity mortgage with Canada Mortgage and Housing Corporation (CMHC).
- Existing homes: Qualified first-time home buyers could be funded (equity sharing) of up to 5% of the purchase price. No ongoing monthly payments are required.
- For Newly constructed homes: Qualified first-time home buyers could be funded (equity sharing) of up to 10% of the purchase price. No ongoing monthly payments are required.
- Since no ongoing payments would be required with the Incentive, Canadian families would have lower monthly mortgage payments. For example, if a borrower purchases a $400,000 home with a 5% down payment and a 10% CMHC shared equity mortgage ($40,000), the borrower’s total mortgage size would be reduced from $380,000 to $340,000, reducing the borrower’s monthly mortgage costs by as much as $228 per month.
- The program limits eligibility to households earning a maximum of $120,000 annually, and lets them borrow no more than four times their annual household income. This limits a home purchase to roughly $505,000. This incentive plan will be discussed more fully in the coming days, but it is not expected to begin until fall, 2019.
- Budget 2019 also proposes to increase the Home Buyers’ Plan withdrawal limit from $25,000 to $35,000, providing first-time home buyers with greater access to their Registered Retirement Savings Plan savings to buy a home.
- Terms and conditions for the First-Time Home Buyer Incentive would be released by CMHC.