First Time Home Buyers Get Some Help From The Federal Budget

The Federal Government announced proposed new initiatives for First Time Buyers. CMHC (Canadian Mortgage and Housing Corporation) is launching a $1.25 billion initiative to make purchasing a home easier: 

• CMHC to provide up 10% to first time buyers, in exchange for equity in home. This essentially provides up to 10% down payment towards home purchases.
• This initiative is not a replacement of your down payment, instead it's a payment free loan, on top of the down payment required, towards the purchase. 
• CMHC will match up to 5% on resale homes and 10% on newly constructed homes.
• CMHC would take an EQUITY stake in the buyer’s home for the amount contributed.

• Minimum allowed down payment of 5% = $25,000 and the Mortgage loan would have been $475,000.
• Now CMHC will provide $50,000 (10% of the price as equity stake).
• The Mortgage loan taken is now, reduced by that $50,000 to $425,000 (helping reduce monthly payments by, approximately, $250 per month).
• The Mortgage loan is paid back upon sale of the home or sooner, if the Buyer wishes.
• Requirements

• Income below $120,000 per year per household.
• Home purchase limit of $505,000.

• Now First Time Buyers can withdraw up to $35,000 from their RRSPs towards a home purchase.
• Payback is from 3 to 15 years, with years 1 and 2 as grace periods of non-repayment.