Breaking Down The First Time Buyer’s Program: What You Need To Know
Launched in September of 2019, the First Time Buyer’s Program is the federal government’s incentive aimed towards improving the ability of first-time home buyers to afford housing. The program offers 5 or 10% of the home’s purchase price to put towards a down payment which can help lower your mortgage carrying costs and make home ownership more accessible. Below, we’ll explore a few key points of the incentive including who is eligible, how to apply and more. Read on to learn more!
What Is The Incentive?
As mentioned above, the objective of the First-Time Home Buyer Incentive is to make it easier for Canadians to buy a new home and lower your monthly mortgage payments. The program is a shared equity mortgage that allows you to borrow 5 or 10% of the purchase price. Homeowners then pay back the same percentage of the value of your home when you sell it, or within a 25-year window (whichever happens first). For example:
If you receive a 5% incentive on the purchase price of $200,000 ($10,000) and your home’s value increases to $300,000, your payback would be 5% of the current value ($15,000).
As the name implies, the incentive is for first-time home buyers, which refers to those who:
Have not purchased a home before.
Did not occupy a home that you or your current spouse/common-law partner owned in the last 4 years
Have recently experienced the breakdown of a marriage or common-law relationship.
Who Is Eligible?
When determining your eligibility, the following criteria is applied:
You have your minimum down payment
Your total annual qualifying income is less than $120,000
Your total borrowing is no more than 4 times your qualifying income.
You or your partner are a first time home buyer
You are a Canadian citizen, Permanent Resident, or a non-permanent resident authorized to work in Canada.
Eligible properties include:
Residential properties can have 1 to 4 units and include:
Single family homes
The incentive must be paid in full after 25 years or when the home is sold. Other aspects that may affect this stipulation include:
You go through a break up and you want to buy out the co-borrower. If this requires additional insured funds, you must pay back the Incentive in full.
Porting your mortgage will trigger a repayment of the Incentive.
A partial release of security is considered a sale and will trigger repayment of the Incentive.
A change in the intended use of the property.
– source Government of Canada
How To Apply
Once you’ve been pre-approved for a mortgage, are eligible under the terms of the program, and have a property you’re looking to buy, there are two application forms to fill out that your banking professional will assist you with.
Owning your first home doesn’t have to be a complicated process. With help from government funding programs like the First Time Home Buyer Program and an experienced builder, getting settled can be straight forward. For more information on buying your first home in Central Alberta, contact Abbey Platinum Master Built today!