September 3, 2019
Update: First-Time Home Buyers incentive program launch
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Manzeel is an award-winning Mortgage Broker and the Owner of the Toronto-based mortgage, Everything Mortgages.
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Starting September 2 eligible Canadians can buy into the Canada Mortgage and Housing Corporation’s new shared equity mortgages for first-time buyers.
Duclos, Minister of Families and Social Development, has announced the First-Time Home Buyers incentive program in Richmond Hill, ON Wednesday morning. “We understand and feel how big a struggle it is for younger, middle-class families, in particular, to achieve their dream of first-time homeownership,” said Duclos, “Home prices have increased more rapidly than incomes and wages.”
Generally, the First-Time Home Buyer Incentive is designed to benefit those who need more assistance with housing costs, middle-class Canadians. It helps you purchase your first home!
The aim of the program is to support first-time homebuyers without adding to their financial burdens. There are no extra monthly payments. Users must have required minimum insured mortgage down payment.
Government of Canada provides:
- 5% or 10% for a first-time buyer’s purchase of a newly constructed home
- 5% for a first-time buyer’s purchase of a resale (existing) home
- 5% for a first-time buyer’s purchase of a new or resale mobile/manufactured home
The program is available to participants with qualified annual incomes of $120,000 or less.
Here are some key definitions to know before the participation:
Shared Equity Mortgage (SEM)
- The government of Canada has a shared investment in the home and shares in both the upside and downside of the property value.
- The loan is not interest-bearing, with no regular principal payments.
- The loan is required to be repaid at the end of the 25-year term or at the time of sale, whichever is earlier. It can also be repaid in full at any time without a prepayment penalty.
First-Time Home Buyer
- The definition follows Canada Revenue Agency (CRA)’s criteria to participate in the Home Buyers Plan (HBP)
- The homeowner is considered a first- time home-buyer if one of the following qualifications are met:
- Has never purchased a home before
- In the last 4 years, did not occupy a home that the homeowner or homeowner’s common-law partner owned
- Has gone through a breakdown of a marriage or common-law partnership (even if/when the other first-time homebuyer requirements are not met)
Homeowner Consent & Attestation
- The Homeowner will be required to download a form from the program’s website to read and understand the terms and conditions of the program.
- As well, an attestation is required from the homeowner to confirm that they are a first-time homebuyer.
- Lenders are required to receive and retain these documents on file prior to submitting the application for the Incentive. Lenders are not required to provide advice on the consent and attestation documents.
The types of properties in the incentive include single-family houses, semi-detached houses, townhouses, condo units, duplex, triplex, and fourplex. So, if you need more financing details, want to calculate the minimum down payment or already decided to make your big step, contact our experts and make the first investment in your successful future.
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