We’re learning some new information about the new first-time homebuyers’ program that is due to launch in the fall. While CMHC says it still has a lot of work to do, in consultation with lenders and industry stakeholders, on Friday they released some information about the program’s intent and rationale behind its design.
When the program was first announced, the maximum purchase price, for first-time homebuyers, allowed under the program was $480,000. That amount has been increased to $505,000.
Summary of the First-time Homebuyers’ Incentive
This article from Canadian Mortgage Trends Friday, outlines the intent of the first-time homebuyer program.
“While many details are yet to be worked out over the coming months, CMHC summarized some of the intents and benefits of the program:
- A way to assist first-time homebuyers without adding to their financial burden.
- No monthly payments.
- The program will require borrowers to meet minimum insured mortgage down payment requirements, “ensuring they are invested in their purchase.”
- While aimed at first-time buyers, the program will result in freed up rental supply and will thus ease pressure on rents, CMHC says.
- The cost of the program is capped at $1.25 billion over three years. It is also limited to a maximum combined income of $120,000 and total borrowing limited to four times income.
CMHC said it doesn’t expect the FTHBI’s inflation effect to be beyond a maximum of 0.2-0.4%.
“Limiting house price inflation will keep housing more affordable, more so than some of the other suggested policy and regulatory changes,” CMHC’s statement said. “For example, a reduction of one per cent in the mortgage insurance stress test or an extended amortization limit of 30 years would have added to indebtedness and resulted in house price inflation of five to six times more than this maximum.””
Not too much new here. I guess a little information is better than none at all. For more details, refer to our recent post on the Anatomy of Mortgage Changes.
Are you are a first-time homebuyer, looking to enter the market in the next couple of years? Let’s talk. We can discuss how this new incentive might impact you.
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