Initiative reduces monthly mortgage payments without increasing down payment amounts
Got the income but lack the savings necessary to purchase your first home?
The federal government is introducing the First-Time Home Buyer Incentive program in an attempt to help middle-income families take steps toward purchasing property. The initiative, which launches Sept. 2, reduces monthly mortgage payments without increasing down payment amounts. First-time homebuyers who have the minimum down payment for an ensured mortgage can apply to finance a portion of their purchase through a form of shared equity with the federal government.
It is open to households with an income of up to $120,000.
This program applies to new or existing homes, parliamentary secretary to the minister of families, children and social development Adam Vaughan said.
“It is designed to benefit those who need more assistance with housing costs,” he said July 25 during an announcement at a more than 100-unit build on Essa Road in Barrie. “Thanks to mortgage payments that are more affordable, many families will have hundreds of dollars more each month in their pockets — money to spend on things like healthy food, sports for their kids or even save for the future. We have to provide a program that’s flexible, but we want to make sure we continue to build on one of our economic drivers, the new home builders.”
Under the program, a family that purchases a home between $200,000 and $500,000 in value can save between $1,372 and $3,430 in mortgage payments each year. The intention is to help families better manage household debt without lowering home values, Vaughan said.
The program is expected to cost the government $1.25 billion over three years, but 100,000 Canadian families could be eligible over the first 12 months, he said.
Sean Mason Homes owner Sean Mason said the federal plan will provide greater certainty for developers.
He estimates about 75 per cent of the homes at his Essa build would have qualified for the program.
“This is very important,” he said. “As lending standards have tightened, (it’s harder) to get the financing on the entire project.”
No ongoing repayment is required; buyers must cover the loan after 25 years, or if they sell the property.
The first closing under the program is expected to take place Nov. 1.
For more, visit placetocallhome.ca.
by Chris Simon
Chris Simon is a journalist with the Barrie Advance. He can be reached at firstname.lastname@example.org