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OPINION: CMHC insurance has shifted from enabling homeownership to inflating prices

The Canada Mortgage and Housing Corporation (CMHC) mortgage loan insurance program is a government-backed initiative that allows homebuyers to purchase properties with less than a 20 per cent down payment.

Initially designed to help Canadians without significant savings enter the housing market, CMHC insurance has since become the single greatest catalyst of real estate demand in the federal government’s arsenal.

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First-Time Buyer Federal Housing Programs

First-time home buyers:

  • First-Time Home Buyer Incentive (FTHBI): Provides a shared equity mortgage with the Government of Canada to help first-time home buyers lower their monthly mortgage payments without increasing their down payment.
  • First-Time Home Buyers’ Tax Credit (HBTC): Budget 2022 proposed increasing the amount used to calculate the First-Time Home Buyers’ Tax Credit to $10,000 (from $5,000), which would provide a tax credit of up to $1,500 to eligible home buyers. This amendment applies to the 2022 and subsequent taxation years.
  • Home Buyers’ Plan (HBP): Allows eligible home buyers to withdraw up to $35,000 from their Registered Retirement Savings Plan (RRSP) to put towards the down payment of their first home.
  • Tax-Free First Home Savings Account (FHSA): Designed to give first-time home buyers the ability to save $40,000 on a tax-free basis with an annual contribution limit of $8,000. The government is working with financial institutions to have the infrastructure in place for individuals to be able to open an FHSA and start contributing at some point in 2023.

Help for the First-Time Buyer a Seller’s Market

First time home buyers have had a particularly hard time buying homes in the last two years due to the strong seller’s market. It can be more difficult for sure, but don’t give up!

Considering different housing options and locations, being prepared (bank/mortgage) and being decisive will help you be successful. I believe that even though we continue to be in a seller’s market, there are now more opportunities for buyers.

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