Sudden surprise! The latest adjustments to the Canada Mortgage and Housing Corporation’s (CMHC) 2021 first-time homebuyer policy were quietly released and will take effect next week. In addition to the government-subsidized down payment on the old, the limit that first-time homebuyers cannot earn more than $120,000 per year when buying a home in Toronto, Vancouver, and Victoria has been relaxed to $150,000, and the maximum loan amount has been increased from 4 times to 4.5 times of income. The loan amount rose from 480,000 to 15 X 4.5 = 675,000. This policy applies to all non-residents in the country who are about to become new immigrants.
At the time of the 2019 Canadian federal election, current Prime Minister Justin Trudeau introduced the First-Time Homebuyer Incentive (FTHBI) program, which was officially implemented on 2/9/19. The program is equivalent to a government grant (incentive payment) of a certain amount to help homebuyers reduce the amount of monthly mortgage payments they need to make.
Those eligible for this policy must be first-time homebuyers, cannot earn more than $120,000 per year (increased to $150,000 for the 2021 New Deal adjustment), and in addition the amount of mortgage held, plus the incentive amount, cannot exceed four times the participant’s annual household income (increased to 4.5 times for the 2021 New Deal adjustment).
Specific policy measures include: For the purchase of an existing home, a 5% incentive amount is available. For the purchase of a newly constructed home, a 5% or 10% incentive amount is available. For new or resale mobile/manufactured homes, a 5% incentive amount is available. Encourage the availability of new construction housing. No ongoing repayment is required and the incentive does not accrue interest; borrowers may repay the incentive amount at any time without paying an early payoff penalty. The value of the equity owned by the government varies up or down with the value of the housing. The buyer must repay the incentive after 25 years, or when the property is sold.
The government’s goal is to allow more middle-class people, and those working hard to join the middle class, to find safe, convenient and affordable housing. This policy will help nearly 100,000 families across Canada to own their first home.
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