Looking to buy your first home? The First Time Home Buyer Incentive Program (FTHBI) wants to make it a little easier for you to do so. The Canada Mortgage and Housing Corporation (CMHC) will contribute part of the down payment in exchange for sharing in the appreciation or loss when you eventually sell your home- known as shared equity or co-ownership.
With the program launching on September 2, 2019 for homes that close on or after November 1, 2019, there are certain qualifications or restrictions to participating in the FTHBI.
Qualifications and Restrictions:
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First-time home buyer
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Maximum salary of $120,000
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Total value of the mortgage plus the CMHC portion must equal $480,000 or less (meaning it is only available for properties worth $565,000 or less)
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Home buyer must come up with 5% (minimum) down payment and qualify for a mortgage (for both resale and newly built homes)
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CMHC will contribute up to an additional 5% for resale homes
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Newly built homes make the home buyer eligible for up to 10% from CMHC
All of this means that the money from CMHC is interest-free and there are no traditional repayments required. This is because it is an equity share. As a result, your monthly payments are reduced (your down payment is higher with CMHC's contribution) and CMHC is repaid a proportionate percentage of the price when you sell the home (5% from sale price if 5% was contributed when the home was purchased) or after 25 years- whichever comes first.
For example:
Imagine you are buying a a two-storey townhome in our Merritton Commons community for $464,900. Your required 5% down payment would be $23,245 and it would grow to $46,490 with a 5% contribution from CMHC.
Due to the borrow amount being limited to four times your annual income and a maximum purchase price of $565,000, a lot of residents in the GTA will unfortunately not be eligible for the FTHBI as the average condo was sold at $590,274 and the average house at $832,703.
The good news? If you're looking to buy a home in Niagara, this can apply to you! Learn more about the First Time Home Buyers Incentive.
