First-Time Home Buyer Incentive from Federal Government
Quick Facts about the First Time Homebuyer Incentive:
- Canada’s First-Time Home Buyer Incentive will help qualified first-time homebuyers purchase their first home as the incentive reduces their monthly mortgage payment, without increasing the amount that they must save for a down payment. The program will launch on September 2, 2019, with the first closing on November 1, 2019.
- The incentive will allow eligible first-time homebuyers who have the minimum down payment for an insured mortgage with CMHC, Genworth or Canada Guaranty, to apply to finance a portion of their home purchase through a form of shared equity mortgage with the Government of Canada.
- For the purchase of an existing home, an incentive amount of 5 percent may be available. For the purchase of a newly constructed home, an incentive amount of 5 percent or 10 percent may be available.
- Doubling the incentive for purchasers of new homes encourages new housing supply.
- No on-going repayments are required, the incentive is not interest bearing, and the borrower can repay the incentive at any time without a pre-payment penalty.
- The government shares in the upside and downside of the change in the property value.
- The buyer must repay the incentive after 25 years, or if the property is sold.
- The incentive will be available to first-time homebuyers with qualified annual household incomes up to $120,000. At the same time, a participant’s insured mortgage and the incentive amount cannot be greater than four times the participant’s qualified annual household income.
- Per the table below, for a family buying a $500,000 home, this program could save them as much as $286 per month or more than $3,430 a year (note: for illustration purposes only, results subject to change depending upon amortization, interest rate, term, etc.).
|without FTHBI||with FTHBI||without FTHBI||with FTHBI||without FTHBI||with FTHBI|
|Down Payment (5%)||$10,000||$10,000||$17,500||$17,500||$25,000||$25,000|
|Insured Mortgage + Mortgage Insurance Premium||$197,600||$174,760||$345,800||$305,830||$494,000||$436,900|
|Savings on Monthly Payment||$114||$200||$286|
|Savings on Yearly Payment||$1,372||$2401||$3,430|