Are you ready to take your first steps towards homeownership, but need a little help figuring out the financial details? Wondering how you get settled into a mortgage that doesn’t break your bottom line or keep you from achieving your dream of having your very own home? Launched in September of 2019, Canada’s First Time Buyer’s Program is the federal government’s answer to these questions and is aimed towards improving the ability of first-time homebuyers to afford housing. The program offers 5 or 10% of the home’s purchase price to put towards a down payment, which can help lower mortgage carrying costs and make homeownership more accessible for Canadians from all walks of life. Below, we’ll explore more details of the incentive including who is eligible, how to apply and more.
The First Time Home Buyer Incentive Low Down
The primary objective of the First-Time Home Buyer Incentive is to make it easier for Canadians to buy a new home without mortgage payments that strain your overall budget and quality of life. The program is designed to be a shared equity mortgage that allows home buyers to borrow 5 or 10% of the total purchase price from the Federal Government, then pay back the same percentage of the value of your home when you sell it, or within a 25-year window (whichever happens first). For example:
If you receive a 5% incentive on the purchase price of $200,000 ($10,000) and your home’s value increases to $300,000, your payback would be 5% of the current value ($15,000).
It’s important to note that, as the name implies, the incentive is for first-time homebuyers that have:
- Not purchased a home before.
- Have not occupied a home that you or your current spouse/common-law partner owned in the last 4 years
- Have recently experienced the breakdown of a marriage or common-law relationship.
The following criteria are used to further determine eligibility:
- Buyers must have the minimum down payment
- The Buyer’s total annual qualifying income must be less than $120,000
- The borrowing total must be no more than 4 times your qualifying income.
- Applicants must be a Canadian citizen, Permanent Resident, or a non-permanent resident authorized to work in Canada.
Eligible properties include:
Residential properties can have 1 to 4 units and include:
- Single-family homes
- Semi-detached homes
- Condominium units
- Mobile homes
As mentioned, the incentive must be paid in full after 25 years or when the home is sold. Aspects that may change this stipulation to varying degrees include:
- A buyer goes through a break-up and wants to buy out the co-borrower. Note: If this requires additional insured funds, you must pay back the Incentive in full.
- Porting your mortgage will trigger a repayment of the Incentive.
- A partial release of security is considered a sale and will trigger repayment of the Incentive.
- A change in the intended use of the property.
Source: Government of Canada
Once a buyer has been pre-approved for a mortgage, if they are eligible under the terms of the program, and have a property selected, there are two application forms to fill out with the assistance of your banking professional. From there, a little patience will pay off and you can say hello to your very own home sooner than later!
Abbey Platinum Master Built: Central Alberta’s Preferred Builder
Buying your first home doesn’t have to be a complicated process. With help from government funding programs like the First Time Home Buyer Program and an experienced builder, getting settled can be straight forward. For more information on buying your first home in Central Alberta, contact Abbey Platinum Master Built today!