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Canada’s First-Time Home Buyer Incentive Program: What You Need to Know
December 10, 2019 | Posted by: Adrian Schulz - Winnipeg Mortgage Broker: Rental Property Financing and Commercial Mortgage Solutions
Purchasing your first home is a rite of passage for many residents of Winnipeg and throughout Canada, but for some, it’s a dream that seems out of reach. With this in mind, the Government of Canada has established a first-time homebuyer incentive program designed to help as many citizens as possible achieve their dreams of homeownership.
- Here is a brief overview of what the program does, and who is eligible to apply.
What is the first-time home buyer incentive program?
- This program is for those who are looking to purchase their first home, and would like assistance in reducing the monthly payments—without increasing their down payment. The incentive isn’t interest-bearing, and you don’t need to make ongoing payments. Essentially, the government is sharing both the upsides and downsides of the property’s equity with you. This is available in either 5 percent or 10 percent options.
- The incentive can be paid back either after 25 years have elapsed, when the property is sold or pre-paid at your convenience, without a penalty. The repayment amount will be based on the property’s fair market value—so if your home loses value, you won’t be required to pay based on your original purchase price. Of course, if it increases in value, then you’ll be on the hook for a larger payment.
- This incentive is ideal for those who want to purchase a home, but would be unable to save for a larger down payment or take on big monthly mortgage deals. It’s limited to first-time buyers because those who already own a home presumably have equity or savings from their previous purchase.
There are a few qualifications for this program, including:
- Down payment: You must already have saved the minimum down payment that your lender will allow for that particular house.
- Maximum income requirements: Your maximum qualifying income cannot exceed a certain limit, which is currently $120,000 per year.
- Price limits: You can only borrow four times your maximum qualifying income. For example, if your income is $50,000 per year, you can borrow $200,000. If you make $120,000 per year, that soars to $480,000.
- Citizenship: Canadian citizens, permanent residents and non-permanent residents who are legally authorized to work in the country can apply for this incentive.
- First-time home buyers (and beyond): If you or your partner have never purchased a home before, you qualify for the incentive. Additionally, if you’re experiencing the dissolution of a marriage or common-law partnership, you are eligible even if you have owned a home before. Finally, you are also eligible if, in the last four years, you did not occupy a home that you or your current spouse or common-law partner owned.
- Ready to start looking for your first home in Winnipeg?
- The best way to decide whether the first-time home buyer incentive will work for you is to speak to a mortgage professional. They can discuss your options with you, and describe what your payments are going to look like, so that you can finally get your dream home. For more information about the program, and for assistance with securing a mortgage in Winnipeg, please reach out to Adrian Schulz Mortgage Agent with Centum Financial Services LP today.