New Incentives For First Time Home Buyers In Budget 2019 – Explained

First Time Home Buyers Incentives In Budget 2019

The Finance Minister Bill Morneau has just introduced Budget for 2019. He said the government is looking to help more Canadians buy their first homes by picking up a portion of their mortgage costs and increasing the amount they can borrow from their retirement savings for a down payment.

These are the Main Features of the Budget Regarding First Time Home Buyers

1.The Buyer can qualify for CMHC’s shared-equity loan of 10% on New Homes and 5% for Re-sale homes.
2.The Loan will be payable when the Buyer sell his/her property
3.The Maximum Household income should be under $120,000 per year.
4.The Maximum loan should be no more than 4 times of the household income.
5.The Buyer can also take up to $35,000 from RRSP up from $25,000

We are still waiting for further details of these initiatives.

Now take a look at The following example adapted from the 2019 budget plan. It illustrates how this First-Time Home Buyer Incentive will work

On the left side we have Insured Mortgage Model with no incentive and on the right side, we have CMHC First-time Home Buyer Incentive Model. House Price is $400,000, Down Payment is 20,000 which is 5% percent,  total Insured mortgage is $380,000
and the total monthly Carrying Cost is $1,973.

Now look at the right side the House Price is the same $400,000, Down Payment is  $20,000 and, CMHC is contributing 10% which is $40,000 of Purchase Price, the Insured Mortgage is Now $340,000 and monthly Carrying cost is $1,745 which is a saving of $228 per month.

Some experts say that The Government could have done a few other things to increase the supply of housing, like changing the rules around zoning and opening up Greenbelt for more land for housing, or subsidize housing construction.

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