The government has decided to expand their First Time Home Buyer Incentive Program. In terms of containing a hot housing market, this does not seem to make sense. While the IMF and local banks warn against such types of incentives, the government definitely have different goals.
This program was originally launched in 2018 and basically the government is helping buyers with not enough down payment to get into the housing market. Depending on the situation, the government will lend you up to 10% of the purchase price. It is an interest free loan BUT that 10% is consider an investment by the government. Regardless of what price you sell your property for, the government will want 10% of it back. So, the government will share in the increase or decrease in value of your property.
There was another limitation that made it unpopular. There was a restriction on the size of the mortgage based on the household income. Back then it was 4 times which was less than the typical 4.5 to 5 times without the program. In this new expansion for the Vancouver and Toronto area, this factor has been changed to 4.5 times which makes it more useful. Also, it has increased the household income limit allowed to be in the program to 150,000 from 120,000. For more information, click on the link below.
