CMHC announces details of the new shared-equity program

In a move first announced in the Budget in March, the federal government has allocated $1.25B over 3 years for CMHC to provide shared-equity mortgages to reduce the mortgage costs for first-time home buyers. The program is called the First-Time Home Buyer Incentive.

CMHC recently released details about how the program will work. See below for links to more information.

The program would allow for interest-free loans of up to five per cent for existing homes and up to 10 per cent for new homes, provided the government receives the equivalent equity stake in the property. The loan must be repaid if the house is sold, or after 25 years. However, the repayment will reflect the value of the home at the time the repayment is made, not the value when it was purchased. This means that the government could take either a gain or a loss on the loan.

This is not a significant cash grant to new homebuyers, and many commentators have expressed concern that the program may result in increases in the price of homes, which would be counter-productive. Therefore, the program is unlikely to reduce rental demand much, or at all.

The program will officially launch on September 2, 2019.