Are you teetering on whether you can afford to buy a house or not?
Well there’s good news on the horizon. The Canada Mortgage and Housing Corporation, a division of the government responsible for helping people enter the housing market, is kicking in and making it easier for first time buyers to make the leap.
Under the new CMHC First-Time Home Buyer Incentive, $1.25 billion will be used over the next three years to help lower mortgage costs for eligible Canadians. Borrowers will still have to pony up a down payment of at least five per cent of the home purchase price, but under the new incentive they will also receive up to ten per cent of the house price from CMHC, therefore lowering the amount of their mortgage. A smaller mortgage equals smaller monthly payments, which helps offset costs of home ownership.
Mortgage applicants will still have to qualify under the federal stress test, which ensures that borrowers will be able to keep up with their debt repayments even at higher interest rates. However, the incentive would essentially lower the bar for test takers, as applicants will have to qualify for a lower mortgage.
Additionally, under the Home Buyers Plan (HBP) you can withdraw from your RRSP to use it for a down payment on a home. Under the new 2019 budget, the amount you can borrow has now increased from $25,000 to $35,000. This amount still needs to be repaid over 15 years, but it is essentially an interest free loan from yourself (or your retirement).
For more information, visit CMHC’s website at https://www.cmhc-schl.gc.ca/en