First-Time Buyers Incentive program - updated
Tuesday Oct 11th, 2022
Thinking about buying your first home? Finding out more about the First-Time Buyers Incentive program is a great place to start. With high prices and raising interest rates, first-time buyers need all the help they can get. The First-Time Buyers Buyer Incentive (FSTBI) can help make your mortgage payments more affordable.
What is the First-Time Buyers Incentive program?
It is part of the federal government’s National Housing Strategy designed to help middle-class first-time homebuyers across Canada buy their first home. The First-Time Buyers Incentive program is designed to lower the monthly mortgage payments without increasing the amount of money you need to save for a down payment. Simply put, it is a shared equity mortgage. The program offers 5% - 10% of the home’s purchase price to put toward a down payment making homeownership more affordable.
What is a Shared Equity Mortgage?
A shared equity mortgage means that you take a smaller mortgage & your lender owns equity in your home. You and your lender become co-owners. You get to live in your home but only have to borrow a fraction of the purchase price. The lender offers a down payment loan to the buyer that does not have to be repaid until the property has sold. It’s like a second mortgage on your home.
How do you qualify for the First-Time Buyers Incentive program?
⭐️You have never owned a home.
⭐️You did not occupy a home that you or your current spouse or common-law partner owned in the last 4 years. (the 4-year period begins on January 1 of the fourth year before the Incentive is funded and ends 31 days before the date the Incentive is funded)
⭐️You have recently experienced the breakdown of a marriage or common-law partnership. (even if you don’t meet the other first-time homebuyer requirements)
Am I eligible for the First-Time Buyers Incentive program?
(these numbers reflect someone trying to buy a home in Toronto, Vancouver, or Victoria, they are lower in the rest of Canada)
➡️Your total annual income can not exceed $150,000/year.
➡️The total amount you are borrowing can not be higher than 4.5 times your qualifying income.
➡️You and your partner are first-time buyers.
➡️You are a Canadian citizen, permanent resident, or non-permanent resident authorized to work in Canada.
➡️You meet the minimum down payment requirements with traditional funds (savings, withdrawal/collapse of a Registered Retirement Savings Plan (RRSP), or a non-repayable financial gift from a relative/immediate family member)
The bottom line: Your property must be located in Canada and must be suitable and available for full-time, year-round occupancy. Your home is for you to live in and can’t be used as an investment property.
Use this calculator to see if you qualify.
How does repayment of the First-Time Buyers Incentive work?
💵It must be paid in full after 25 years or when you sell the property.
💵If you go through a breakup and want to buy out the co-borrower and it triggers additional insured funds.
💵If you transfer your mortgage (with its current rates & terms) to another property.
💵A partial release of security (some of the collateral to be released from a mortgage after the borrower pays a certain amount of the loan) is considered a sale and can trigger repayment.
If you are interested in finding out more about how the First-Time Buyers Incentive program could work for you, give me a shout, I’d love to walk you through it.
This information should not be relied on as legal advice, financial advice, or a definitive statement of the law in any jurisdiction. For such advice, please consult your own legal counsel or financial representative.