Canada’s new First-Time Home Buyer Incentive (FTHBI) program is now up and running, created to assist first-time homebuyers in purchasing property.
First-time homebuyers – millennials, in particular – will benefit from the program through reduced monthly mortgage payments that won’t increase the required down payment for a home.
The program is part of the federal government’s plan to encourage homeownership and reduce steeply increased home prices across the country. It works as a sort of shared equity between homeowners and the federal government through mortgage insurance providers, such as Canada Guaranty, the CMHC (Canada Mortgage and Housing Corporation) or Genworth.
The FTHBI program could save families as much as $286 per month – or more than $3,430 per year – if they were to purchase a $500,000 home with a $25,000 down payment, for example. The amount saved for each qualifying family is dependent upon where the home is purchased and what type of home it is.
Applications for the program are being accepted now through November 1, 2019.
Who Qualifies for the Program?
As many as 100,000 Canadian families are expected to benefit from the $1.25-billion, three-year program. However, there are a few requirements for first-time homebuyers to qualify for the program:
First-time homebuyers can receive up to 5% of the cost of an existing home, or up to 10% of the cost of a new home, as long as they have a household income of less than $120,000.
Buyers will be required to pay back the incentive within 25 years or whenever they sell the home, whichever comes first.The government will share in the profits if the property is sold for more than its original purchase price; but, it will also share in the losses if the property decreases in value and is sold for less than its original purchase price.