Government lays out fine print of new CMHC program that could contribute 10% to price of first home
If you read the big bold text up top, yes you read that correctly! There is some great news for many potential first time buyers who had lost all hope. So from what I have read and understood, during the last federal budget back in March will be finally launching in September. So what are the prerequisites for this program you might be thinking, a first-time homebuyer who earns less than $120,000 can qualify. CMHC would kick in up to 10 percent of the purchase price of the home, providing you the borrower will come up with the minimum amount for an insured mortgage, which is now set at 5 percent. The other requirement in addition to the first one, the total value of the mortgage plus the CMHC's portion does not exceed $480,000. So what that means is the program is only available for properties worth a maximum of approximately $565,000, regardless of whether or not they have met the other requirements. So if that requirement is met then there is a very good chance that CMHC will give you an additional 5 percent of the purchase price of a resale home, if it is a newly built home then you might receive up to 10 percent.
The greatest thing to this loan is that the amount you receive from The Canada Mortgage and Housing Corporation is going to be completely interest-free which means there is no ongoing cost to pay down as you would with your mortgage.
With all this "free" money there is going to be a small catch, CMHC will participate in receiving a portion of your profit should you decide to sell. Let us use an example to illustrate this if the home you purchase is approximately $500,000, and you the borrower place a down deposit of $25,000 and CMHC puts in 5 percent, the CMHC would now be a part owner at 5 percent of that home. So after a few years of ownership, the house appreciates to $600,000 and you the borrower decide to sell, you would have to pay the CMHC 5 percent of the sale price — which in this example would be $30,000, and not just the original amount CMHC gave you to start - $25,000.
The full story can be read here
This is wonderful news and very exciting news! If you ever thought of purchasing and you want more information on your options and where you stand, feel free to give me a call and I will be more than happy to assist you in any way with your home buying journey.
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