First-Time Home Buyer Incentive Program: 3 Helpful Tips
Buying a home can be a dream come true for many Canadians. But it can also be an expensive proposition. The good news is that the Canadian government offers a program to help first-time home buyers reduce their monthly mortgage payments.
The First-Time Home Buyer Incentive is a shared-equity mortgage program that offers up to 10% of the purchase price of a newly constructed home or 5% for an existing home. In this blog post, we’ll discuss what the program is, who is eligible, and other details you need to know before you apply.
What is the First-Time Home Buyer Incentive?
The First-Time Home Buyer Incentive is offered by the Canadian government. The incentive program is designed to help qualified first-time homebuyers reduce their monthly mortgage payments. You can achieve this through a shared-equity mortgage with the government of Canada.
The program offers up to 10% of the purchase price of a newly constructed home or 5% for an existing home. The shared-equity component means that the government shares in both the upside and downside of the property value.
The program is available to Canadian citizens, permanent residents, or non-permanent residents authorized to work in Canada.
Who is Eligible for the First-Time Home Buyer Incentive?
To qualify for the First-Time Home Buyer Incentive, there are several criteria you need to meet. These include:
- Your total annual qualifying income doesn’t exceed $120,000. ($150,000 if the home you are purchasing is in Toronto, Vancouver, or Victoria).
- Your total borrowing is no more than 4 times your qualifying income. (4.5 times if the home you are purchasing is in Toronto, Vancouver, or Victoria).
- You or your partner are a first-time homebuyer.
- You are a Canadian citizen, permanent resident, or non-permanent resident authorized to work in Canada.
- You meet the minimum down payment requirements with traditional funds (savings, withdrawal/collapse of a Registered Retirement Savings Plan (RRSP), or a non-repayable financial gift from a relative/immediate family member).
Your first mortgage must be greater than 80% of the value of the property and is subject to a mortgage loan insurance premium. It also must be eligible through Canada Guaranty, CMHC, or Sagen. The insurance premium is based on the loan-to-value ratio of the first mortgage only. You don’t pay mortgage insurance on the incentive. The mortgage insurance is included with your total total down payment.
What are the Other Details You Need to Know?
There are a few other things you need to know about the First-Time Home Buyer Incentive program. First, the incentive is like a second mortgage on your home. Your first mortgage must be greater than 80% of the value of the property. Second, the Incentive often has additional costs. These can include additional legal fees, appraisal fees, and other fees. Finally, the property must be located in Canada and must be suitable and available for full-time, year-round occupancy.
The First-Time Home Buyer Incentive is a great program for first-time homebuyers who are struggling to make their monthly mortgage payments. The program offers up to 10% of the purchase price of a newly constructed home or 5% for an existing home.
To be eligible, you must meet several criteria, including having a total annual qualifying income that doesn’t exceed $120,000 ($150,000 if the home you are purchasing is in Toronto, Vancouver, or Victoria).
If you are eligible, the First-Time Home Buyer Incentive program can help you achieve your dream of homeownership. Learn more about the program today!
