Federal Budget Overview

The Federal Budget highlighted some key measures to help first time home buyers’ get into the market.  Here are the key points:

1. Maximum withdrawal for RRSPs increased by $10,000 in federal home buyers plan, increasing tax-free RRSPs withdrawal to $35,000 effective immediately. Keep in mind that the repayment timeline of 15 years to avoid full income tax on the withdrawal remains.

2. CMHC First time homebuyers incentive: CMHC will provide 5% of the cost of an existing home and 10% of the price of a new home through an interest-free loan to be repaid when the property is sold. The money would go to first time home buyers for an insured mortgage only.

Key Stipulations:

  • The user must have a down payment of at least 5% but less than 20%
  • Household income must be less than $120,000
  • Purchase price cannot be more than four times the buyers household income.

For example:

You’re hoping to buy a $400,000 home with the minimum required 5% down payment, which works out to be $20,000. With the new incentive, you could receive up to $40,000 (for a new home) through the CMHC. Now, instead of taking out a $380,000 mortgage, you’d need to borrow only $340,000. This would lower your monthly mortgage bill from over $1,970 to less than $1,750. The incentive is 10% for buyers purchasing a newly built home and 5%  for existing homes. 

These stipulations effectively limit purchases under this plan to properties priced at less than $500,000 ($480,000 maximum in insured mortgage and incentive, plus the downpayment).

The relief for first-time homebuyers is pretty meager especially for those in the metro area.


If you have any questions please don’t hesitate to contact me directly!

Federal Budget 2019 Overview