The Canadian government’s first-time homebuyer incentive program offers a shared-equity mortgage that enables eligible first-time buyers to lower their monthly mortgage payments and improve their ability to purchase a home.

The Incentive: 

By offering an incentive to assist with the down payment, this program helps to lower the overall mortgage amount and reduce monthly mortgage costs.

• 5% or 10% for a first-time buyer’s purchase of a newly constructed home
• 5% for a first-time buyer’s purchase of a resale (existing) home
• 5% for a first-time buyer’s purchase of a new or resale mobile/manufactured home

Qualifying for the Incentive: 

This program is designed to assist first-time homebuyers. You must:

• Have never purchased a home before
• Have not occupied a home that you, your current spouse, or common-law partner owned in the last four years
• Have recently experienced a breakdown of the marriage or common-law partnership

Further qualifications based on your income and status are:

• Your total qualifying income is no more than $120,000 ($150,000 for homes in Toronto, Vancouver, or Victoria)
• Your total borrowing is less than four times your qualifying income (four and a half times your income if you are purchasing in Toronto, Vancouver, or Victoria)
• You are a Canadian citizen, permanent resident, or non-permanent resident authorized to work in Canada
• You meet the minimum down payment requirements

Additional Costs: 

With the incentive, there are a few additional costs to be aware of such as additional legal fees (your lawyer is closing two mortgages, one on your behalf and that on the Government’s behalf), appraisal fees to determine the repayment value of your home when it comes due, plus other potential fees such as refinancing or switching costs if you decide to move or update your mortgage.

Repayment Process: 

When it comes to repayment of the incentive, the homebuyer is required to pay back after 25 years or when the property is sold, whichever comes first. They are also able to repay anytime before this without penalty. The repayment is based on the fair market value at the time of repayment and you would pay back what you received. For instance, if you received a 5% incentive, you would repay 5% of the current home value at the time of repayment.

Keep in mind, if you choose to port your mortgage or go through a separation during the term and want to buy out your co-borrower, you will have to repay the incentive sooner.

Click here to learn more about the First Time Homebuyer Incentive and contact Your Mortgage Expert today to get started on your home-buying journey!