How the First-Time Home Buyer Incentive Program Works?

If you are looking to buy a new home, then you must have heard about the First Time Home Buyer Incentive Program to help make home ownership more accessible by the Government of Canada. This incentive raises your down payment, which reduces your mortgage carrying costs and makes house ownership slightly simpler in the long run. If you wish to save money, here is everything you may want to know about the program, how it works, and who is eligible.

What is the First Time Home Buyer Incentive Program?

This program is designed by the Government of Canada for first-time home buyers to help them purchase their first home. Under this offering, the government will give 5-10% of the home’s value towards the down payment in exchange for a share of the home's worth.

The program is offered across Canada and is run by the Canada Mortgage and Housing Corporation (CMHC). The aim is to assist first-time home buyers in lowering their monthly mortgage payments and increasing the affordability of home ownership.

Eligibility Requirements

You must first meet the eligibility criteria to qualify for the first-time home buyer incentive program.

It is only applicable for first-time home buyers; it means that neither you nor your partner can have recently purchased a home.

A minimum 5% down payment of the home's buying price is required.

Your total household income cannot exceed four times the price of the home you wish to purchase.

You must have an annual household income of less than or equal to $120,000 per year. But if you are a resident of Toronto, Vancouver, or Victoria’s census metropolitan areas, then your qualifying household income is $150,000.

You must live there as your primary residence.

This program is only for newly built homes or existing homes that have recently undergone construction or renovation.

How Does The Program Work?

Under the First Time Home Buyer Incentive Program, the government provides a down payment contribution of up to 10% of the home's purchase price. The government contributes to the project by shared equity mortgage, which signifies that the government has an interest in the home's worth

If the house is sold after 25 years, the shared equity mortgage must be paid back. The percentage of the shared equity mortgage that the government contributes will determine how much money you owe them.

By reducing the amount of money you need to borrow from a traditional mortgage lender, the program can help you cut your monthly mortgage payments. This will help you to lower the cost of home ownership and enable you to generate long-term financial savings.

Final Words

If you have the right information and guidance about the program, the First Time Home Buyer Incentive Program can result to be a valuable tool for first-time buyers who are struggling to save up for a down payment. This way, you are not only reducing your monthly mortgage payments but making the whole process much more affordable too. Think carefully before you apply and take the proper steps towards achieving your big dream of owning a home. Start your home-buying journey today; explore over six million properties on The Canadian Home App.