First-Time Home Buyer Incentive

Posted by Mir Khan on Monday, July 15th, 2019 at 9:00pm.

The First-Time Home Buyer Incentive is a program that the Government of Canada is launching on the 02nd of September 2019 to help reduce the monthly mortgage payments by owning equity in the buyer's home. Please see below most of the details on this incentive:

  • Total Grant Amount that the Government of Canada is set aside for all First-Time Home Buyer's: $1.25 Billion over 3-years
  • Starting September 02nd, 2019 with the closing for the sale - starting on or after November 01st, 2019
  • Easy 1-page application - the mortgage broker can help with this during application process
  • To qualify, the buyer must be:
    • A Canadian citizens, permanent residents, and non-permanent residents who is legally authorized to work in Canada
    • At least one borrower must be a first-time home buyer
    • The Buyer will need to have minimum down payment of at least 5% of the purchase price
    • The Buyer's qualified annual income is no more than $120,000/yr
    • The Buyer's insured mortgage and the incentive amount cannot be greater than four times the qualified annual income
  • If you meet these criteria, you can then apply for a 5% (re-sale/existing homes) or 5%-10% (new constructions) 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.

 How does it work?

  • The Incentive enables first-time home buyers to reduce their monthly mortgage payment without increasing their down payment. The Incentive is not interest bearing and does not require ongoing repayments.

 How do I know how much I have to pay back?

  • You can repay the Incentive at any time in full without a pre-payment penalty. You have to repay the Incentive after 25 years or if the property is sold, whichever happens first. The repayment of the Incentive is based on the property’s fair market value.
  • For example:
    • You receive a 5% incentive of the home’s purchase price of $200,000, or $10,000. If your home value increases to $300,000 your payback would be 5% of the current value or $15,000.
    • You receive a 10% incentive of the home’s purchase price of $200,000, or $20,000 and your home value decreases to $150,000, your repayment value will be 10% of the current value or $15,000.

 NOTE: If your property value goes down, you are still responsible for repaying the shared equity mortgage based on the current home value at time of repayment.

 What properties are eligible?

  • The Incentive is to help first-time home buyers purchase their first home. Eligible residential properties include:
    • new construction
    • re-sale home
    • new and re-sale mobile/manufactured homes

Residential properties can include 1 to 4 units.

  • Types of residential properties include:
    • single family homes
    • semi-detached homes
    • duplex
    • triplex
    • fourplex
    • town houses
    • condominium units

IMPORTANT: The property must be located in Canada and must be suitable and available for full-time, year-round occupancy.

More details are still being released and updated. Please use this information as preliminary information and not as all facts.

Please contact me directly for more details and any questions, I will do my best to address all questions and concerns in a timely manner.

Feel free to leave to comment or ask me something by entering it below 'Leave a Comment' box ...

Thanks for reading.

Mir Khan
Certified International Property Specialist, International Realtor
Century 21 AAA Realty Inc.
(778) 558-4427

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