For most people, home ownership is part of their ideal life. However, for many Canadians, finding an affordable place to call home is becoming increasingly difficult. That’s why the Canadian Government is introducing the First-Time Home Buyer Incentive – a program designed to help buyers access homeownership in a reliable way. For first-time buyers wondering what this program is all about, we’ve gathered everything you need to know about this exciting new initiative.
What is the First-Time Home Buyer Incentive?
The First-Time Home Buyer Incentive (FTBHI) is a program offered by the Government of Canada to make homeownership more attainable for Canadians. Set to launch on September 2nd, the program involves the government buying equity stakes in homes purchased by qualified first-time buyers. This helps them reduce their mortgages, thus reducing their monthly mortgage payments.
How does the FTHBI work?
All first-time buyers who are approved for the FTHBI will receive financial assistance from the Canadian Government through the Canadian Mortgage and Housing Corp. Through this program, the CMHC will pay five percent of the purchase price of a resale home, or, five to ten percent of the value of a new construction in exchange for an equity stake.
Buyers who choose to take advantage of the First-Time Home Buyer Incentive can repay the loan in full at any time. However, it is mandatory that the loan is repaid after 25 years or when the home is sold, whichever comes first. When it’s time to repay your loan, the amount owed is based on the fair market value of your home. So, for example, if you receive a 5% incentive on a home worth $100,000, you’d get a $5,000 loan. However, If your home’s value increases to $200,000 at the time of repayment, your payback would be 5% of its current value – $10,000.
Who is the First-Time Home Buyer Incentive for?
The FTHBI is for anyone looking to purchase their first home but can’t afford the monthly mortgage payments needed to pay off a mortgage below $500,000. Applicants can be Canadian citizens, permanent residents and non-permanent residents who have permission to work in Canada. To qualify for the First-Time Home Buyer Incentive, buyers will have to:
- Have a minimum down payment of at least 5% of your home’s purchase price readily available.
- Have a qualifying household income of no more than $120,000.
- Limit your total borrowing to four times the qualifying income.
Buyers who meet these criteria can apply for a five or ten percent shared equity mortgage with the Government of Canada – allowing them to share in both the upside and downside of your property value.
What properties can you purchase with the FTBI?
With the First-Time Home Buyer Incentive, you can purchase new homes edmonton, resale homes and mobile/manufactured homes. This includes everything from single-family and semi-detached homes, to fourplexes and condos. However, the property being purchased must be located in Canada, and be suitable and available for full-time, year-round occupancy.
How can first-time buyers apply?
To take advantage of this incentive, eligible first-time buyers can simply fill out and sign an application and take it to your mortgage lender who will then submit the application on your behalf.
The First-Time Home Buyer Initiative is an amazing opportunity which helps buyers own their ideal homes, and with this program, you can get one step closer to building your dream home with Morrison. For more information about the FTHBI, visit the CMHC website.