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Canada’s Federal Budget 

The Minister of Finance Bill Morneau presented the 2019-2020 federal budget on March 19th. Key themes include growing the economy, implementing national pharmacare, investing in the middle class, and gender equality.

The much-hyped anticipation of changes to the B-20 rules affecting first-time home buyers and the millennial market didn’t deliver the assistance industry professionals were hoping for.

To assist First Time Home Buyers, the budget includes the following:

First-time homebuyers Incentive: First-time homebuyers whose household income is under $120,000 may qualify for an interest- free loan from Canada Mortgage and Housing Corporation of 10% for new homes and 5% for existing homes. This allows you to put more money down and borrow less for your mortgage. This will go into effect in September of 2019. Borrowers must have a down payment of at least 5% — but less than 20% — and a household income under $120,000.

The purchase price of the home cannot be more than four times the buyers’ household income. This effectively limits purchases to just below $480,000, which is close to the national average resale home price.

They’re calling it a “shared equity mortgage”.  CMHC will loan this money in exchange for a corresponding equity stake in the home.

The budget is far from clear on how much the buyer would owe; is it the same dollar amount the CMHC provided up front, or does the bill go up based on how much the house has appreciated in value?

Home Buyer’s Plan: RRSP withdrawals increase to $35,000 from $25,000, whether married or common-law, even if separated or divorced, as long as the money is used for a first home.

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