New Details on First-Time Home Buyer Incentive

Global News has shined new light after learning new information on the First-Time Home Buyer Incentive, which Canada Mortgage and Housing Corporation (CMHC) has presented as a teaser with many questions left unanswered.

Recap of the program details provided as a teaser, which was announced on April 4, 2019 in CMHC webpage and in the government’s Budget 2019:

• CMHC would help some first-time home buyers by advancing interest-free loan up to 5% for existing residential property or 10% for new built residential property
• This program is only eligible to first-time home buyers with annual household income under $120,000
• The insured mortgage and the incentive amount altogether cannot be greater than 4 times the home buyers’ annual household income

The additional new information reported by Global News (3) is as follows:

• This program will launch on September 2, 2019
• Buyers must pay the incentive back to CMHC after 25 years or if the property is sold, and they can repay it at any time without any penalty
• If the property price goes up over time, the government will get part of the price increase
• If the property price goes down over time, the government will shoulder part of the loss

Author’s note: the incentive amount from CMHC is not included as part of the mortgage amortization schedule. That means, over the duration of the amortization schedule (which coincidentally is also 25 years long for insured mortgage loan), or until when the property is sold, home buyers have to

• set aside money to repay the incentive amount and
• the amount will be adjusted according the value of the property at that time

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