First-time buyers will be permitted to borrow up to $35,000 from their RRSPs, up from $25,000, the limit set 10 years ago, Finance Minister Bill Morneau announced in Tuesday’s federal budget.
As the centrepiece of its budget plan to boost home ownership, the Liberal government also launched a new shared equity mortgage plan to benefit first-time buyers with incomes of $120,000 or less, to be administered by Canada Mortgage and Housing Corp. (CMHC).
The measures are aimed at helping millennials and new Canadians break into a housing market that is seen as increasingly unaffordable, especially in big cities like Toronto and Vancouver.
The new First-Time Home Buyer Incentive, for those with an annual income of $120,000 or less, would provide an interest-free CMHC loan worth up to 5 per cent of the value of an existing property or 10 per cent of a new-construction home. The government says the $1.25 billion in financing would benefit about 100,000 Canadians over three years. Another $100 million in financing would be administered through third-party groups, including non-governmental organizations.
The new First-Time Home Buyer Incentive, for those with an annual income of $120,000 or less, would provide an interest-free CMHC loan worth up to 5 per cent of the value of an existing property or 10 per cent of a new-construction home. The government says the $1.25 billion in financing would benefit about 100,000 Canadians over three years. Another $100 million in financing would be administered through third-party groups, including non-governmental organizations. The incentive would be in addition to the buyer’s own down payment — a minimum of 5 per cent of the home’s value. The overall value of a mortgage and CMHC loan won’t be allowed to exceed four times a recipient’s household income. With that cap of $480,000, it means the highest-value home that could be purchased under the plan would be around $500,000.
