On March 19, 2019 the Government of Canada announced a program, First-Time Home Buyers Incentive (FTHBI), where insured first-time home buyers can purchase through a shared equity mortgage with Canada Mortgage and Housing Corporation (CMHC). A 2019 Budget strategy that is said to support affordable housing for the middle class while easing the pressures on the limited rental supply and rental rates.
A follow up announcement by CMHC on April 4, 2019 provided a bit more insight to the reasons for the program, but offered little as to how the program will be administered. There are still far more questions than answers and the projections as to how many Canadians this program will help, an estimated 100,000, is questionable. With the limits to the household income of $120,000, the mortgage amount capped at four times the household income and a max purchase price of $505,000 including mortgage default insurance, there is only a very small fraction of the market that will be able to qualify or utilize the incentive.
I have held off commenting on this as there is so little information available to comment accurately and fairly on the merits of this plan. It is expected for this program to launch in September 2019 and, I, for one hope to hear more from CMHC over the coming weeks as to how they see this in operation. Understanding how it will impact a borrower’s overall equity, legal costs for set up of this type of mortgage and how the lenders will qualify each applicant are some of the questions needing answers before anyone can consider applying.
As details are released, I will continue to inform.