Must Read About the First-Time Home Buyer Incentive in Canada
Buying a home soon in Canada? Good news! A few days ago, the federal government launched a program that will make things easier for millennials to buy their first home in some of Canada’s hottest real estate markets. The program is called the FTHBI or First-Time Home Buyer Incentive. Homebuyers who are approved for this incentive must close their transaction on or after the 1st of November 2019.
The FTHBI was announced earlier this year as part of the 2019 platform for that Trudeau government. With FTHBI, homebuyers will have an easier time handling monthly mortgage payments. Payments will be reduced and first-time homebuyers will also not have to suffer having to pay increased down payment.
How to Qualify for the First-Time Home Buyer Incentive Program?
To qualify for this program, the home buyer must be a Canadian first-time home buyer who has a household income of less than $120,000. The incentive is 10% of the cost of the new home and should be paid back when the home is sold or within 25 years.
The government has allocated a total of 1.25 billion dollars in funding for this program for the next 3 years. With this program, if a property is sold higher than when it was bought, the government will benefit. Note that if the property’s value decreases, then the government will take a hit.
What Homes Can People Buy with This Program?
For cities that are highly desirable such as Toronto or Vancouver, it is most likely that the properties that new homeowners can buy won’t be a house. The price of houses in these markets are very competitive. Another factor is that not many houses are usually available at the given time. Note that the average home cost is almost $1,000,000 in Toronto and more than $800,000 in Vancouver as of July 2019.
Note too that the mortgage of the property that the new homeowner wants to buy cannot be more than 4 times the maximum household income of $120,000. This means that the cap is at less than half a million dollars. This also means that the price of a home available to be purchased using this program will only be between half a million dollars to $600,000 depending on how much someone can afford for down payment. If buying a home with this program, you might want to consider buying a home in more affordable locations such as Calgary, Ottawa, Montreal, or Edmonton.
Can Homebuyers Save Money with the FTHBI?
If you’re going to buy a home with a $25,000 down payment and the home’s cost is at around half a million, this program can save you more than $3000 a year or $286 a month. Of course, these are not the same values for everyone but should give you an idea of what to expect.
How to Apply for First-Time Home Buyer Incentive?
You’ll need to sign completed application documents and give them to your lender. Your lender will submit the documents on your behalf through the proper channels. Once your documents are accepted and processed, you have to call FTHBI via (1-833-974-0963) and give the name of the notary or lawyer so it can be noted.
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