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 | |
---|---|---|---|---|---|---|
House Price | $200,000 | $200,000 | $350,000 | $350,000 | $500,000 | $500,000 |
Down Payment (5%) | $10,000 | $10,000 | $17,500 | $17,500 | $25,000 | $25,000 |
FTHBI (10%) | NA | $20,000 | NA | $35,000 | NA | $50,000 |
Insured Mortgage | $190,000 | $170,000 | $332,500 | $297,500 | $475,000 | $425,000 |
Insured Mortgage + Mortgage Insurance Premium | $197,600 | $174,760 | $345,800 | $305,830 | $494,000 | $436,900 |
Monthly Payment* | $989 | $875 | $1,731 | $1,531 | $2,473 | $2,187 |
Savings on Monthly Payment | $114 | $200 | $286 | |||
Savings on Yearly Payment | $1,372 | $2401 | $3,430 |
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Source: www.cmhc-schl.gc.ca