What the heck is the First Time Home Buyer Incentive program?
June 21, 2019 | Posted by: Natalie Wellings
We finally have some information on the new program being rolled out this fall where the government will lend buyers 5-10% of the purchase price of a home…
Here’s what we know so far:
• Your total household income must be less than $120k/year.
• The maximum mortgage amount will be $480,000.
• You must put in a minimum of 5% down and the government will lend you an additional 5% (10% on a brand new home).
• The loan will be interest free, but in exchange the government will get an equity stake in your property so they also get part of the increase in value. They will also absorb some of the loss if the property loses value.
• The loan must be repaid in 25 years or if you sell the property before then.
• Applications will be accepted starting September 2nd.
It will be interesting to see how many buyers actually use this program considering the restrictions involved and the fact that the government will have an equity stake in your home. In my opinion it would have been much less convoluted to just increase the maximum amortization to 30 years. Doing so would have increased affordability by reducing the monthly mortgage payment. This might end up being an administrative nightmare for the government with significant cost to the taxpayers to run the program.
I will update you as I hear more!