As part of its 2019 federal budget, Justin Trudeau’s government unveiled a program that aims to address housing affordability across the country.
The plan includes Canadian Mortgage and Housing Corp. (CMHC) providing funds to help reduce mortgage costs for low- to middle-income first-time homebuyers.
Under the First-Time Home Buyer’s Incentive, Ottawa is setting aside $1.25 billion over three years towards so-called shared equity mortgages, which it expects will be used by 100,000 homebuyers. It’s intended to improve housing affordability by reducing the mortgage load for borrowers that would effectively result in lower monthly payments.
While the details aren’t yet clear on how the government will “share” equity in Canadians’ first homes, here’s what we do know:
- It’s only available to first-time buyers with household incomes of less than $120,000 a year
- It’s for CMHC-backed mortgages, which are required if the buyer puts less than a 20-per-cent down payment on a property
- CMHC will contribute 10 per cent towards a shared equity mortgage for newly-built homes, and five per cent for existing homes
- The program is capped at four times the participant’s household income, whereby the mortgage value plus the CMHC loan cannot exceed $480,000
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