Can’t afford to buy a house? The government may take on part of the cost. Under the new CMHC First-Time Home Buyer Incentive, the Canada Mortgage and Housing Corporation would use up to $1.25 billion over three years to help lower mortgage costs for eligible Canadians
The money would go to first-time home buyers applying for insured mortgages. Borrowers would still have to come up with a down payment of at least 5% of the purchase price. On top of that, they would receive an incentive of up to 10% of the house price, which would lower the amount of their mortgage. The incentive is offered at 10% of the property price for new builds, and 5% for existing homes. To qualify your annual household income needs to be below $120,000.
For example, say you’re hoping to buy a $400,000 new-build home with the minimum required 5% down payment, which works out to $20,000. With the new incentive, you could receive up to $40,000 through the CMHC. So instead of taking out a $380,000 mortgage, you’d only need to borrow $340,000. This could lower your monthly mortgage bill from over $1,970 to less than $1,750.
One drawback of the scheme, especially for buyers looking to purchase in the GTA, is that the amount of the insured mortgage plus the CMHC incentive would be capped at four times the home buyers’ annual incomes, or up to $480,000. This means the most expensive homes that participants would be able to buy would be around $500,000 ($480,000 max in insured mortgage and incentive, plus the down payment amount). And many would argue there isn’t a lot you can buy in the GTA for that amount anymore………
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