The Federal Government’s First-Time Home Buyer Incentive will launch on September 2, days before an expected fall election call.

The new program was announced in the federal budget in March of 2019, but some of the key details about how the program would work were left out.

Below are the details we know so far –

Eligible first-time home buyers, with a maximum household pre-tax income of $120,000 a year, who have the minimum down payment for an insured mortgage can apply for the funding in the form of a shared equity mortgage with the federal government.

Under the plan, the government would help some first-time buyers by advancing an interest-free & payment-free loan of up to five per cent of the purchase price of an existing home, and up to 10 per cent of the cost of a new home.

This would allow the home buyers to take out a smaller mortgage and keep their monthly payments lower.

Buyers must repay the incentive after 25 years or if the property is sold, and they can repay it at any time without any penalty.

The buyer’s mortgage plus the loan awarded cannot total more than four times their annual income.

If the house price goes up, the government will get a percentage of the price increase. And if the house price decreases, Ottawa will shoulder a percentage of the loss.

For example, a new house that is purchased for $100,000 could qualify for a 10 per cent interest-free loan worth $10,000. If the home was later sold for $110,000, the home buyer would need to repay $11,000.

More details can be found here.

Contact me for any details, or apply online!