The First Time Home Buyer Incentive (The summary you have been waiting for!)


While we still need a lot of information surrounding the First Time Home Buyer Incentive.


So what do we know at this point?

  1. The RRSP withdrawal limit will go from 25,000 to 35,000.

  2. CMHC will provide a "shared equity mortgage" to home owners.

  3. CMHC will provide the loan up to %10 of the cost of a NEW home

  4. CMHC will provide a loan on an existing/USED homes up to 5%

  5. First time Home owners must still put down 5% of the purchase price of the property.

  6. The total household income has to be less than $120,000.00 a year to qualify.

  7. The price of the house cannot be more than $500,000.00


So what does that mean?


First of all, it could mean that it might help our real estate field because it enables more first time home owners to buy because they did not have enough saved up before. Depending on other factors it may also create houses under $500,000.00 to increase in value, but that is not for certain.


Secondly, CMHC (Canada Mortgage and Housing Corporation) allows home owners to borrow up to 95% of the purchase price of a home. Now, with the new Federal budget, they will provide a "shared equity mortgage" in which they will basically give an interest free loan to a first time home owner of 5% for a used house and 10% for a new house. One catch: the home buyer will still need to pay the amount of money that they were lent after the sale of the house. This holds implications when you buy a home. The future real estate market is never set in stone or any unforeseen factors (floods, structural damage, pet damages, etc) that may lower the value of your home in the future. Even if you sell your home at a lower value you will still need to pay back the money and if you do not that is called... So if something were to happen could you afford to pay back the loan immediately?


While this is great for those that would have not been able to afford a home without this, any breaks will not be applicable to those first time home owners who will not use a CMHC loan. Because at the end of the day a loan is still a loan and the money that you will receive is not yours.


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