FIRST-TIME HOME BUYER INCENTIVE
A major item from this week’s federal budget is the first-time home buyer incentive.
Under the plan, the government will advance up to 10 per cent of the purchase price of a home so first-time buyers can take out a smaller mortgage and keep monthly payments lower.
Here are the five main things you need to know about this bold incentive:
- Buyers must make a down payment of at least five per cent but less than 20 per cent. And they must have a household income below $120,000 a year.
- The amount of the insured mortgage plus the CMHC incentive is capped at four times the home buyer’s combined annual income, or up to $480,000.
- The CMHC will provide up to $1.25 billion in incentives over three years starting in September. Buyers of newly-constructed homes will get 10 per cent of the home price, while those purchasing an existing property will get five per cent.
- Home buyers must repay the CMHC, either when the home is sold or sooner.
- The federal government plans to raise the amount first-time buyers can pull from their RRSP to fund the purchase of their home, $35,000, up from $25,000.
Changes are also being planned to allow people dealing with the break-up of a marriage or common-law partnership to dip into those savings a second time.