The First-Time Home Buyer Incentive Makes Buying a House in Canada Cheaper Than Ever
Announced at the beginning of the year, Canada’s First-Time Home Buyer Incentive (FTHBI) is now active. This down payment incentive will make it easy for thousands of first-time homeowners to buy a home.
Also, applications for the incentive are being accepted until November 1,2019. We will discuss how the government is looking to make owning a house cheaper for you.
What is the First-Time Home Buyer Incentive (FTHBI)?
This incentive program is designed specifically for first-time homeowners in Canada. It was created with the aim of helping young people purchase a home without incurring hefty mortgage payments.
With this incentive, the government takes responsibility for 5% of your down payment for already existing Canada homes and 10% for newly built homes. This way, you can decrease your monthly mortgage payments without increasing your down payment.
If you are buying a $500,000 home, the FTHBI could help you save as much as $3,400 annually. With the down payment incentive, first-time homeowners can take the bold step to own a home in Canada.
Specifics of the 2019 First-Time Home Owner Incentive
This incentive definitely makes buying a home cheaper. With the government ready to take responsibility for up to 10% of your down payment, you can reduce your mortgage. In Canada, a more substantial down payment equals to less mortgage payments.
Is the home-owners incentive free? Of course, not. It’s a leg up. However, you have to pay the government back. If the incentive pays 5 or 10% of your down payment, the government goes on to own that percentage of your home.
You have to pay the government a fair market value of the amount put forward after 25 years. If your home increases or decreases in value during this period, the down payment percentage put forward by the government also corresponds accordingly.
If you do decide to sell your home before the 25 year period is up, you have to pay the government back after the sale. That’s not all. Also, you can pay the government back at any time within the 25-year limit without incurring a penalty. It’s as simple as that.
As you can see, the government does most of the heavy lifting for you. However, there is some red tape you have to pass through. Keep reading to find out what it is.
How to qualify for the first-time home buyers initiative
To be eligible for the down payment incentive, you have to be a citizen of Canada. Alternatively, permanent and non-permanent residents also qualify, as long as they have the legal authority to work in Canada.
Also, you have to pay the minimum down payment for your home and have an income less than $120,000. Additionally, your down payment must not be more than four times your total income. If you can put down more than 20% for your down payment, you do not qualify to use this incentive.
How to use the first-time homeowner incentive
Extra support is always a great thing to have when you are diving into the real estate market for the first time. The CMHC First-Time Home Buyer Incentive (FTHBI) is that extra support. You can easily take advantage of it if you meet the criteria listed above.
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