A Guide to the First-Time Home Buyer Incentive

Jan 15

By John Haddad, REALTOR at New Purveyors

For many Canadians, the dream of owning their first home may seem financially daunting, but with the First-Time Home Buyer Incentive, the path to homeownership becomes more accessible. This program, designed to assist individuals nationwide, provides a boost to your down payment, ultimately reducing mortgage carrying costs and making the dream of owning a home a reality.

Eligibility Criteria

To take advantage of the First-Time Home Buyer Incentive, certain eligibility criteria must be met:

Income Limits: Your total annual qualifying income must not exceed $120,000. However, this limit is extended to $150,000 if the property is located in Toronto, Vancouver, or Victoria.
Borrowing Limits: The total borrowing, which includes your mortgage and the amount provided by the program, should not exceed 4 times your qualifying income. In the aforementioned cities, the limit is slightly higher at 4.5 times the qualifying income.
First-Time Homebuyer Status: You or your partner must be a first-time homebuyer.
Residency: You must be a Canadian citizen, permanent resident, or a non-permanent resident authorized to work in Canada.
Minimum Down Payment: Meet the minimum down payment requirements with traditional funds.
Property Requirements: The property must be located in Canada, suitable for full-time, year-round occupancy, and intended for personal use rather than as an investment property.

How It Works

Let’s break down the mechanics of the program with an example:

Anita's Scenario:

Anita is eyeing a new home with a purchase price of $400,000 and has diligently saved the minimum required down payment of $20,000 (5% of the purchase price).

Through the First-Time Home Buyer Incentive, Anita can apply to receive $40,000 in a shared equity mortgage, which constitutes 10% of the home's cost.

This injection of funds reduces the amount Anita needs to borrow, resulting in a significant drop in her monthly expenses. In concrete terms, Anita's mortgage is now $228 less per month or $2,736 less per year.

The First-Time Home Buyer Incentive is a powerful tool for Canadians aspiring to step onto the property ladder. By providing a financial boost to the down payment, the program eases the burden of homeownership, making it more feasible for many individuals and families.

As a REALTOR at New Purveyors, I am committed to guiding you through the intricate process of purchasing your first home. If you have dreams of homeownership, let's explore the possibilities together and see how the First-Time Home Buyer Incentive can work for you. Contact me today, and let's turn your homeownership dreams into reality.