There’s nothing wrong with having big dreams like becoming a homeowner in Canada. Truthfully, that’s a delight. There’s just this immense sense of security that clouds your existence when you know you own a home.
But the sad truth is that this becoming a homeowner dream might never become actualized for most people for a couple of reasons.
- What is First Time Home Buyer Incentive (FTHBI)? An Overview
- How do You Qualify for the First Time Home Buyer Incentive?
- How to Repay the First Time Home Buyer Incentive?
- FAQs on First Time Home Buyer Incentive
- What is a first-time home buyers’ incentive?
- Who qualifies for the first-time homebuyer?
- What is first time home buyer incentive Ontario?
- What programs are available for first time home buyers in BC?
- What is the minimum down payment for a house in BC?
- What qualifies you as a first time home buyer Ontario?
- How do first-time homebuyers get incentives?
- What are some tips for a first-time homebuyer?
- Final Thoughts on First Time Home Buyer Incentive
There’s the problem of your finances not being enough to meet up to get you the dream house that you want, for starters.
And waiting till you have enough might not be a great option, especially when there’s a ready buyer for your dream house or the price of the house doubles beyond what you can afford.
We see your pain, and the Canadian Government has come to the rescue with the first time home buyer incentive. You might be wondering what that means, as it might seem a little strange to you.
Well, for now, know that it’s your ticket to the good life, to live out your dream of becoming a homeowner in Canada. Please stick with us longer to dig deep into what this first time home buyer incentive is about.
What is First Time Home Buyer Incentive (FTHBI)? An Overview
Before we talk about how you can qualify for the first time homebuyer incentive (FTHBI), let’s briefly examine what the first time home buyer incentive is all about. Think of it as an easy way to purchase your dream house without having to burden your finances.
It is a shared-mortgage scheme that ensures that the Government shares in the loss if there are damages to the house. That’s because the government shares in the ownership of your home.
Here’s the kicker! Your finances don’t have to suffer for the house you want to buy as the Government gives you 5 or 10% of the price of the home you’re trying to pay for based on whether or not the house is newly constructed.
For instance, if the house is a resale home, you can only get 5% of the first time home buyer Canada down payment incentive. However, if the home you’re looking to buy as a first time homebuyer is a newly constructed home, you’ll most likely get a maximum of 10% down payment of the price of the house. If the home you’d like to buy is mobile or manufactured, this incentive would only grant you 5% of the cost of the home.
There’s no need to suffer the down payment plague just because your finances can’t cover up for you.
The incentive also drastically reduces the monthly mortgage cost that you have to pay. Now, you might be wondering that since it’s an incentive, you’ll need to pay back, yeah? But is the repayment a flexible endeavour? The quick answer is; yes, it is.
You’ll be required to pay back the loan at your own pace but within 25 years or if you sell the property before 25 years is exhausted. So, if you’re a first time home buyer in Ontario, you should jump on this incentive, especially if you’ve confirmed that you qualify for it.
How do You Qualify for the First Time Home Buyer Incentive?
Of course, like most of the incentives you must have come across, there are always criteria you need to meet. In the same vein, there are specific criteria you need to meet to qualify for the first time home buyer Canada grant. Some of the standards include:
+ You must be a first-time home buyer. In other words, you must not have owned or purchased any home previously.
However, if you’ve owned an existing home but your spouse doesn’t, you can still qualify for the incentive.
+ If your spouse or partner by common-law owns a home, you must not have lived or occupied the house for four years.
In other words, if your partner buys a home and you move in with them permanently for four years, you won’t be eligible for this government incentive.
+ Your marriage recently broke down, and you’ve had to split from your common-law partner.
Whether or not you own an existing home or you’ve lived with your spouse in the house they bought for more than four years, this criterion automatically puts you on the list of those who qualify for this government incentive.
+ If you have your minimum down payment for the house you want to buy, you also qualify for an incentive.
The down payment should be up to 5% of the purchase price of the house you intend to buy, minus the incentive you intend to get from the Government.
Your finances have to make up for the 5% minimum down payment. You can get the 5% via savings, monetary gifts from friends and family, money got after the end of a personal investment cycle, etc.
Note that the total down payment you should have ready- including the incentive you’ll get from the Government, must all amount to or be less than 20% of the price of the house.
Here’s why! The government incentive you’ll get is equal to a second mortgage on your home.
+ You have to ensure that your household income doesn’t exceed $120,000 yearly. However, if you live in Toronto, Vancouver, or Victoria (the high-end cities), your yearly household income shouldn’t exceed $150,000.
+ Also, you should know that the total amount you can borrow as an incentive for the first time home buyer down payment from the Government cannot exceed four times your qualifying income.
Practically, this criterion means that if your total household income is $120,000, you can only borrow $480,000, which is four times your maximum household income.
+ You also have to be a citizen of Canada or be a permanent resident.
If you are neither, you’ll qualify for this incentive if your non-permanent resident validates the fact that you’re authorized to work in Canada.
⚠️ The incentive from the Government is not free. You’ll have to pay back after 25 years, or you decide to sell your house.
Now, here’s the kicker! If you sell your house, the Government gets 5% out of the money you got from selling the home.
The bottom line is, whether you sell the house for higher or lower, the Government would get 5% out of the money you made from it.
Also, note that you’ll be automatically disqualified if you intend to use the house you want to take incentive for as an investment property.
The reason? The incentive is only for purchasing a property that you intend to reside in.
How to Repay the First Time Home Buyer Incentive?
After successfully collecting the incentive and purchasing the house, you’ll have to pay back what you owe within the space of 25 years. Although certain situations can arise that could annul the 25-year repayment period, leading you to pay what you owe.
For starters, you’d be required to pay back the entire loan fully if a break-up leads you to want to buy out the co-borrower, who might be your ex.
If there’s a partial release of security or you attempt to port your mortgage, you’d be required to pay the government incentive in full instantly.
Read More>> First Time Home Buyer Tips
FAQs on First Time Home Buyer Incentive
What is a first-time home buyers’ incentive?
It is a shared-equity mortgage incentive aided by the Canadian Government to assist middle-class citizens in affording their dream house. It is precisely for first-time home buyers. So, if you’ve neve r bought a house before, first time home buyers grants practically give you a head start at buying your first home and becoming a homeowner in Canada.
Who qualifies for the first-time homebuyer?
To qualify for first time home buyer programs, you have to be a Canadian Citizen or have a permanent residence permit in Canada who has never owned a house before.
If you do not have a residence permit, your authorization to work in Canada also grants you access to the loan. There are other criteria, but these are just a few criteria you have to meet to qualify for the incentive.
What is first time home buyer incentive Ontario?
The Government of Ontario provides Ontario First-Time Home Buyer Incentive to citizens who are first-time home buyers. You may get up to $4,000 back on your land transfer tax. This implies that if the price of your property is less than $368,000, you will not have to pay any land transfer tax.
What programs are available for first time home buyers in BC?
First time home buyer incentive BC include:
+ First-Time Home Buyers’ Tax Credit (HBTC)
+ Government of Canada’s First-Time Home Buyer Incentive.
+ GST New Housing Rebate.
+ Home Buyers’ Plan (HBP)BC First Time Home Buyers’ Program.
+ Newly Built Home Exemption.
+ Home Owner Grant.
What is the minimum down payment for a house in BC?
The minimum down payment is 5% of the purchase price if it is less than $500,000. If the purchase price is between $500,000 and $999,999, the minimum down payment is 5% of the first $500,000 and 10% of any amount over $500,000. If the purchase price is $1 million or more, the down payment must be 20% or greater.
What qualifies you as a first time home buyer Ontario?
To qualify for first-time home buyer advantages in Ontario, you must not have occupied a property that you or your current spouse or common-law partner owned for at least four years.
How do first-time homebuyers get incentives?
First-time home buyers get incentives after filing the FTHBI – SEM Information Package form and the SEM Attestation and Consent Form online.
You can get PDF copies of these forms from place to call home and give your lenders to complete the submission process for you.
You’ll get your acceptance. Once the acceptance come through, proceed to call FNF Canada. They would grant you access to the incentive.
What are some tips for a first-time homebuyer?
Before you run off to attempt to get your first house and apply for the incentive, ensure that the home you’re planning to take the incentive for is something you can afford.
It reduces your mortgage payments. Also, make plans on where the money for the down payment would come from.
Then consider other factors like how living in the house might either be a blessing or a curse.
Final Thoughts on First Time Home Buyer Incentive
From the information we have shared, obtaining incentives from the Government of Canada requires you to tick quite a few boxes. Sometimes, you only need to fulfill one of the many requirements to qualify for the incentive.
The only downside to this first time homebuyer incentive is that the Canadian government owns 5% of your house. In essence, the Government would share in the money you gain from re-selling the house.
You might not find it a problem, mainly if you sold the house at a reasonable price more than the total amount you paid to secure it. Nevertheless, this incentive is an excellent way for first-time homebuyers to purchase their dream home successfully.
Charity (Charee) Oisamoje is the founder of TheFinanceKey - TFK. She leads the editorial team, which is comprised of subject-matter experts.
Her professional competencies and expertise make her qualified on this topic. She is an expert at collecting details, verifying facts, and making complex subjects easy to understand.
Backed by Solid Credentials: MBA in Finance Canadian Investment Funds (IFIC) Graduate Masters Degree in International Business Chartered Professional Accountant (CPA) Candidate ✔️Chartered Insurance Professional (CIP) ✔️BSc Accounting
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