NEW FIRST-TIME HOME BUYER INCENTIVE PLAN
The First-Time Home Buyer Incentive helps first-time homebuyers without adding to their financial burdens. Eligible first-time homebuyers who have the minimum down payment for an insured mortgage can apply to finance a portion of their home purchase through a shared equity mortgage with the Government of Canada.
The First-Time Home Buyer Incentive launches September 2, 2019*.
* The program will be ready to receive Incentive applications on September 2, 2019 (barring any unforeseen circumstances). The first closing will take effect on November 1, 2019.
How it all works…
There are a few qualifiers to apply for this incentive:
- you need to have the minimum down payment to be eligible,
- your maximum qualifying income is no more than $120,000,
- your total borrowing is limited to 4 times the qualifying income.
If you meet these criteria, you can then apply for a 5% or 10% shared equity mortgage with the Government of Canada. A shared equity mortgage is where the government shares in the upside and downside of the property value.
Let’s look at a specific situation
Anita wants to buy a new home for $400,000 and has saved the minimum required down payment of $20,000 (5% of the purchase price).
Under the First-Time Home Buyer Incentive, Anita can apply to receive $40,000 in a shared equity mortgage (10% of the cost of a new home) through the program.
This lowers the amount Anita needs to borrow and reduces the monthly expenses.
As a result, Anita’s mortgage is $228 less a month or $2,736 a year.
Ten years later, Anita sells the home for $420,000. The Incentive will need to be repaid as a percentage of the home’s current value.
This would result in Anita repaying 10%, or $42,000 at the time of selling the house.
Learn About the Program
- Calculate your maximum purchase price and what you could receive as an incentive.
- Review program details.
- Start looking for a home.
Determine Your Eligibility
- Contact a lender/mortgage professional
- Review program requirements and ensure that this is for you.
- Try theself-assessment tool.
Choose Your Incentive and Apply
- Review the details and select the incentive that is right for you.
- Read, print and sign the application documents (coming soon) and take them to your lender.
- Application submissions will be completed by your lender.
- Notify your solicitor.
- Call the 1-800 number to activate (see “How do I apply?“).
- Early payout options in full are available at any point in the duration of the 25 years.
- Learn more about fair market value and how this will help you calculate repayment.
- Calculate the fair market value of your home and multiply it by the percentage of the Incentive you received.
Visit the First-Time Home Buyer Incentive for more details.