First-Time Home Buyers
This month is First-Time Home Buyers Month, the Incentive helps people across Canada to purchase their first home. This program offers 5 per cent and 10 per cent off of the home’s purchase price, to put toward a down payment. The program will lower your mortgage carrying costs and makes homeownership more affordable.
What Is The Incentive?
The Incentive makes it easier for a first-time home buyer to purchase their home, allowing their monthly mortgage payments to be lower. It’s a shared equity mortgage, meaning that the government shares in the upside and downside of the property value. Allowing you to borrow the 5 or 10 per cent of the home price. You then have the same percentage of the value of your home when you sell or within a 25-year window.
How It Works
As a first-time home buyer, you receive you 5 per cent of the home’s purchase of $200,000, or $10,000. If your home value increases to $300,000, then your payback would be 5 per cent of the current value, or $15,000.
If you’re receiving a 10 per cent incentive of the home’s purchase price of $200,000, or $120,000 and your home value decreases to $150,000, then your repayment value would be 10 per cent of the current value or $15,000.
Are You Eligible?
There are a few criteria that is used to determine if you’re eligible for the Incentive:
- Your total annual qualifying income does’t exceed $120,000
- Your total borrowing is no more than 4 times your qualifying income
- You or your partner area a first-time homebuyer
- 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.
The Incentive act like a second mortgage on your home, and you first mortgage must be greater than 80 per cent of the value of the property. It’s also subject to a mortgage loan insurance program, and it also must be eligible through Canada Guaranty, CMCH, or Genworth.
What Are The Repayment Details?
It’s important to note that the the Incentive must be paid in full after 25 years or when the home is sold. There are also a few ways that the repayment can be triggered; you have separated from your partner and you want to buy them out of their half, porting your mortgage, a partial release of security, or a change in the intended use of the property.
How To Apply To The Incentive
Once you’ve been pre-approved for a mortgage, found the home you want to purchase and that you have determined that you are eligible, you can apply. All you need to do now is apply by filling out the forms, you can find these forms on the first-time homebuyers government website.
After you’ve completed forms, you now need to give them to your lender and they will submit the application. Next you’ll need to give the final signed copy to your lawyer.
Contact Lori VanDinther and Team Today
Make sure you contact Lori VanDinther and her team today if you’re looking to purchase your dream home. Lori will also be happy to answer any questions you might have about the current real estate market.