How Did the First Time Home Buyer Incentive Change?

If you’re looking to learn about the recent changes to the First Time Home Buyer Incentive (FTHBI), you’ve come to the right place! To start, let’s see what the FTHBI looked like before the change.

What is the First Time Home Buyer Incentive?

The First Time Home Buyer Incentive is a program designed to help homeownership become a more affordable reality. The FTHBI is essentially a shared equity mortgage with the Government of Canada meant to reduce your down payment requirement and mortgage payments. If you are eligible, you might qualify to receive 5% or 10% of the purchase price of a newly constructed home. If you being a resale home or a new or resale mobile or manufactured home, you might qualify to receive 5%. Since the Government owns a share of your home, they share in the upside and downside of your property value. Meaning that the Government’s 5% on $400,000 purchase price ($20,000) will end up being ($25,000) if the house sells for $500,000. You must repay the Government at the earlier of the property selling and 25 years. Note that you can repay the incentive anytime without a prepayment penalty.

How Do You Qualify for the First Time Home Buyer Incentive?

• Your total annual income cannot exceed $120,000.
• The mortgage amount cannot exceed 4x your qualifying income.
• You or your partner are First-Time Home Buyers.
• You are a Canadian Citizen, Permanent Resident or Non-Permanent Resident authorized to work in Canada.
• You meet the minimum downpayment requirements for traditional funds (savings, RRSP, non-repayable gift from family).
• Your first mortgage must exceed 80% of the purchase price and be default-insured via CMHC, Canada Guaranty or Sagen.
• The property that you are buying must be owner-occupied and not used as an investment property.

How Did the First Time Home Buyer Incentive Change?

The FTHBI Expanded Program is now live and in full effect! First-Time Home Buyers purchasing a home in the Toronto, Vancouver, or Victoria Census Metropolitan Areas are now eligible for an increased Qualifying Annual Income of $150,000 instead of $120,000 and an increased total borrowing amount of 4.5 instead of 4.0 times their qualifying income. To find out if the home you are looking to purchase is part of the Toronto, Vancouver or Victoria Census Metropolitan Area, click here! 

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