Officially launched in September, the First-Time Home Buyer Incentive was created to help qualified first-time home buyers reduce their monthly mortgage payments. Overall, the First-Time Home Buyer Incentive was created to make owning a home for the first-time a reality.
So, how does the First-Time Home Buyer Incentive actually work?
The incentive is not interest-bearing and does not require ongoing payments. The incentive helps to create a more affordable monthly mortgage payment for the first-time home buyer. The Government of Canada will offer incentives for:
- 5% of a first-time buyer’s purchase of a re-sale home
- 5% or 10% for a first-time buyer’s purchase of a new construction
It is important to remember that the first-time home buyer will need to repay the incentive. The first-time home buyer can repay the incentive in full at any time or if the property is sold after 25 years — whichever happens first. The repayment of the incentive is based on the property’s current fair market value, multiplied by the incentive percentage amount:
- If they received a 5% incentive and the value of the home increased to $300,000, the payback would be $15,000
- If they received a 10% incentive and the value of the home decreased to $150,000, the payback would be $15,000
How to know if your client can actually qualify for the First-Time Home Buyer Incentive?
- Are they a Canadian citizen, permanent resident or a non-permanent resident who is legally authorized to work in Canada?
- Do they have a maximum qualifying household income of $120,000 per year?
- Is at least one borrower is a first-time home buyer?
Additionally, a first-time home buyer can come in many different forms:
- Has never purchased a home before
- Experiencing a breakdown of a marriage or common-law partnership
- In the last four years, did not occupy a home with a current spouse or common-law partner that either owned.
Please click the button below for more information on the First-Time Home Buyer Incentive: