First Time Home Buyers Incentive Details
Here’s what you need to know
As an update to our post dated August 29, 2019, we’d like to review the First Time Home Buyers Incentive Details. We’ll share some facts, pros and cons and provide our two cents on moving forward, with potentially one of the biggest financial obligations you’ll ever make.
A Look At The Program Guidelines
The First Time Home Buyer Incentive is designed to reduce mortgage payments without having to put down additional funds. There is specific criteria involved, but if you meet these criteria then you can apply for this mortgage, which is a shared equity mortgage with the Bank of Canada. The mortgage is not interest bearing and repayment happen when the property sells. The government has allotted $1.25 billion over 3 years.
Some Facts About The First Time Home Buyer Incentive
- Shared equity program with Government of Canada
- Government registered on title as second mortgage
- 5% on existing homes 10% on new homes
- Fully open to repay at anytime
- Government shares in profit or loss when loan is paid out
- Must be repaid within 25 years or when property is sold
- Saves up to $230/month payments
- Must have minimum of 5% down payment, from own resources
- Mortgage must be insured with CMHC, CG or Genworth
- Maximum mortgage amount plus incentive is 480K or 4 times application income
- Income must be less that 120K/year
- May incur appraisal fees on payout
- May incur additional legal fees on setup and payout
Pros and Cons
Pros
No interest
Lower monthly payments
Shared equity on loss
Repaid at anytime, fully open
Cons
Some clients qualify for lower purchase amount
Government on title
Shared equity on profit
Additional costs (legal & appraisal)
Does the First Time Home Buyers Incentive Work Best For You?
Financial situations vary from person to person depending on many dynamics. The best way to learn what works best for you is working with us! We will walk you through the application process, evaluate your current situation, understand your goals and needs and suggest the best mortgage product. Don’t be shy. there is no cost or obligation. Reach out today and the rest is easy as pie.
