Federal Budget For First-Time Homebuyers

Today good news was released in the Federal Budget For First-Time Homebuyers. In recent years, the criteria for getting a mortgage to purchase a home in Canada have become more and more strict. That combined with skyrocketing house prices has pushed a lot of first-time homebuyers out of the market.

Strict Mortgage Qualification Criteria

Some of the qualification criteria that had been introduced included:

• Decreased amortization periods inflated the mortgage payments and made mortgages less affordable.
• Stress test rate forced potential mortgagors to qualify at a higher rate than the contract rate.

These points combined with the fact that the homebuyer would have to come up with at least 5% down (representing $20K on a $400K home) made it virtually impossible for young couples to purchase a home. One saving grace was that prior to the announcement of the Federal Budget For First-Time Homebuyers, they were permitted to withdraw up to $25K from their RRSPs to purchase a home.

Increased RRSP Withdrawal

The recently announced Federal Budget For First-Time Homebuyers announced an increase in the limit of RRSP withdrawals from $25K to $35K. This is welcome news for first-time homebuyers and it is welcome news for mortgage brokers. Why? Because we will allow us to help our clients purchase homes, invest in themselves and stop paying rent.

Federal Budget For First-Time Homebuyers Incentive

Another welcome announcement from the federal budget are interest-free loans from CMHC (Canadian Mortgage and Housing Corporation) that can be used towards the purchase new homes (10%) and existing homes (5%). This will reduce the amount of the mortgage for first-time homebuyers. This incentive will begin in September of 2019 and applies to first-time homebuyers who make less than $120K per year (household income) and have a down payment of 5% to less than 20%.

Robert Floris is a Mortgage Broker. His office is located at 651 Fennell Avenue East in Hamilton, Ontario. If you would like to speak with Robert, he can be reached at 905-574-9200 #215. Alternatively, you can contact Robert here.

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