As of September 2019, the Government of Canada is offering a shared-equity program where they will contribute an additional amount to go towards the purchase of your property (on top of your own down payment). This incentive is an interest-free loan that acts as a second mortgage on the title of the property. The amount they will contribute is dependent on the type of purchase you are looking to make:
For existing homes, the government will contribute an additional 5 percent towards your down payment.
For new builds, they will contribute an addition 10 percent towards your down payment.
1. Your gross household income must be under $120,000 per year. At least one of the buyers has to be considered a first-time homebuyer by the following criteria:
2. Your total mortgage loan must be no more than 4 times your annual income, up to a maximum loan amount of $480,000. After factoring in your down payment, this means you would be able to purchase a home with a maximum purchase price between $500,000-$600,000.
This is an equity-type payout where costs are recuperated by the government upon the sale of the home, or after 25 years. If the value of the home has increased, the government would get a portion of the increase. Likewise, if the value has decreased, they would shoulder a percentage of the loss.
It’s important to note that you must pay back the loan as a lump sum – you would not be able to set up a payment plan as the amount you will owe is dependent on the value of your home at a specific point in time.