The federal government is introducing a new program to help new buyers pay for their first home.
The program, scheduled to kick in on Labour Day, is meant to help qualified middle-class families with annual household income under $120,000 take their first steps to home ownership.
The First-Time Home Buyer Incentive will reduce monthly mortgage payments required for qualified first-time homebuyers without increasing the amount they need to save for a down payment.
For the purchase of an existing home, an incentive amount of 5% may be available. For the purchase of a newly constructed home, the incentive amount could be as high as 10%.
Incentive must be repaid
No on-going repayments are required, the incentive is not interest bearing and the borrower can repay the incentive at any time without a pre-payment penalty. A participant's insured mortgage and the incentive amount cannot be greater than four times the participant's qualified annual household income.
The buyer must repay the incentive after 25 years, or if the property is sold.
For a family buying a $500,000 home, this program could save them as much as $286 per month or more than $3,430 a year, said the government.