Real Estate

Canada introduces 5-10% interest & payment free loans for first time home buyers

  • Last Updated:
  • Mar 26th, 2019 4:08 pm
342 replies
Penalty Box
User avatar
Aug 11, 2005
3894 posts
1238 upvotes
Financed by higher taxes?

Sweet!
google NotDoug
Sr. Member
Aug 3, 2005
880 posts
721 upvotes
Next stop = Moon

How many more L's can the bears take?
Member
Jan 29, 2010
315 posts
126 upvotes
Any views on how this may impact detached? The free mortgage seems to only impact condos.
Member
Jul 25, 2008
302 posts
172 upvotes
ottawa
I'm not really clear on the mechanism here.

It appears to be:
CMHC sets up a fund
CMHC provides up to 10%/5% of the total value of the property towards the insured mortgage
This 'lowers' the total mortgage accordingly
CMHC is repaid upon sale of property/expiry of the insured mortgage. <--- what is owed here is unclear. Is it principal + a prescribed interest rate? Principal alone? 10%/5% total home value? The details here are what makes or breaks this program for a buyer imo.
Penalty Box
Aug 17, 2013
415 posts
214 upvotes
Toronto
It's 5% total for a purchase of an existing house. $500,000 is only a $25,000 loan which will need to be paid off. This is also limited to a maximum income of $120,000 combined for both partners.

This is going to help people buy homes. Only salty people are the ones who can't take advantage of this. The young people are the ones who are going to drive this economy. What's the problem here?
Newbie
Aug 17, 2017
4 posts
14 upvotes
If condos prices are pushed up, I suspect prices will move up for towns and detached as well. I can't foresee condo prices overtaking towns and detached. Current condo owners would have more equity when they sell to move up to a detach as well.
Deal Expert
User avatar
Apr 21, 2004
48998 posts
14433 upvotes
Perfect compliment to the bank of mom and dad:

https://www.budget.gc.ca/2019/docs/plan/chap-01-en.html

How the First-Time Home Buyer Incentive Would Work
Eligible first-time home buyers who have the minimum down payment for an insured mortgage would apply to finance a portion of their home purchase through a shared equity mortgage with CMHC.

The Incentive would reduce the monthly payments required to buy a home. This would give first-time home buyers greater flexibility both in purchasing a home and managing its ongoing costs. With a shared equity mortgage, first-time home buyers would save money every month, giving them more money to pay down their insured mortgage sooner or for other priorities.

CMHC would offer qualified first-time home buyers a 10 per cent shared equity mortgage for a newly constructed home or a 5 per cent shared equity mortgage for an existing home. This larger shared equity mortgage for newly constructed homes could help encourage the home construction needed to address some of the housing supply shortages in Canada, particularly in our largest cities.

The First-Time Home Buyer Incentive would include eligibility criteria to ensure that the program helps those with legitimate needs while ensuring that participants are able to afford the homes they purchase. The Incentive would be available to first-time home buyers with household incomes under $120,000 per year. At the same time, participants' insured mortgage and the Incentive amount cannot be greater than four times the participants' annual household incomes.
Last edited by alanbrenton on Mar 19th, 2019 4:38 pm, edited 1 time in total.
Deal Expert
User avatar
Apr 21, 2004
48998 posts
14433 upvotes
This is almost like the Options for Homes concept in the GTA.
Newbie
Aug 17, 2017
4 posts
14 upvotes
This won't make prices any more affordable. Prices will just increase until it's out of reach for first time home buyers again.
Newbie
Jan 31, 2013
96 posts
89 upvotes
Toronto
The new program, called the ‘First-Time Home Buyer Incentive,’ will be launched in September and be available to first-time buyers with annual household incomes of as much as C$120,000. The amount of the insured mortgage would be capped at four times income, or up to C$480,000.
If this is accurate: LOL.
[OP]
Deal Fanatic
Feb 22, 2011
5652 posts
5283 upvotes
Toronto
The one thing that is also pretty ominous is that now gives the government direct incentive to keep values up since they will now have equity in them on top of liability.

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