The Federal Government joined the Canada Mortgage Housing Corporation (CMHC) to reveal a launch date and details for its First-Time Home Buyer Incentive, an “innovative tool” designed to help middle-class Canadians purchase their first residence.
This June, Jean-Yves Duclos, Minister of Families, Children and Social Development, announced the program will launch September 2, 2019. It will provide interest-loans of up to 5% per cent of the cost of an existing home and 10% of the price of a new home. In so doing, the program aims to reduce first-time home buyers’ monthly mortgage payments without raising the amount they would typically need for a down payment.
“Through the National Housing Strategy, more middle-class Canadians – and people working hard to join it – will find safe, accessible and affordable homes,” said Duclos in the June 17 announcement. “Our proposed measures will reduce the monthly mortgage for your first home by up to $286. This will mean more money in the pockets of Canadians and will help up to an estimated 100,000 families across Canada.”
The incentive will be available for home buyers with qualified annual household incomes of up to $120,000. The total of the insured mortgage and the incentive, however, will be capped at four times the amount of that annual household income, up to a limit of $480,000.
Those who take the incentive will be required to repay the loan after 25 years or when the property is sold. Participants can pay CMHC back at any time beforehand with no penalties.
Duclos confirmed that the government will provide $1.25B in funding for the program over the next three years. According to a report by Global News, the government will receive a percentage of the increase in the event that the house price goes up, and absorb a percentage of the hit if it should go down.