How the new government initiative could help condo buyers
By NextHome Staff
April 16, 2019
April 16, 2019
The federal government wants to help you buy your first home. In the 2019 budget, the government unveiled brand new plans that, it says, will help young buyers who have been shut out of the real estate market.This includes the new First-Time Home Buyer Incentive and the expanding of the ‘Home Buyers’ Plan. Both can be used to buy a condo unit. Here is what you need to know.
Criteria to qualify
The new First-Time Homebuyer Incentive will allow eligible first-time homebuyers to apply to finance a portion of their home purchase through a shared equity mortgage with Canada Mortgage and Housing Corp. (CMHC). Eligibility means you have to have the minimum down payment for an insured mortgage. That is five per cent for a resale home and 10 per cent for a new home. Your household annual income cannot exceed $120,000. Lastly, the insured mortgage cannot be greater than four times the participants’ annual household income. Meaning the mortgage cannot exceed $480,000.Pay back rules not clear
It’s not clear how much has to be paid back; is it an equal equity share or money borrowed plus interest? Those terms and conditions are expected to be released by CMHC. But the government clearly states that no ongoing payment will be required while you own your first home or still have a mortgage payment on it.How it claims to help
The thinking is this will lower your overall monthly payments, effectively making your home more affordable to live in then if you had to carry a larger mortgage. Here is an example the federal budget detailed:If a borrower purchases a new $400,000 home with a five percent down payment and a 10-per-cent 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.