The Government of Canada has created a program to help first-time home buyers with the purchase of a home.  It is called the First-Time Home Buyers Incentive.

In a nutshell, the government is willing to give the purchaser 5-10 percent of the purchase value of the property as a down payment.  In return, the government basically retains a 5-10% stake in the property.  This means if the value of the property increases, so does the repayment amount by that same percentage (to a maximum of 8% per year, if it increases more than 8%, the extra goes to the homeowner).  If the value decreases, so does the amount owed back to the government by the same percentage (also to a maximum of 8% per year).

What is the advantage…

The advantage of the program is that it allows the homeowner to decrease the size of their mortgage by this amount which may allow them to qualify for the mortgage.

Am I considered a first-time homebuyer…

This is actually a bit complicated, however, if you or your spouse (married or common law) have owned a home or one of you has lived in a home the other has owned in the past four years, you likely do not meet the requirements. But if you are buying solely and have never owned a home anywhere in the world, or you and your spouse are buying and have never owned a home anywhere in the world, you will qualify as a first-time home buyer.

Am I otherwise eligible…

To be eligible, you must match the following additional criteria:

• Your total qualifying income does not exceed $120,000 ($150,000 if home is in Toronto, Vancouver, or Victoria)
• Your total mortgage amount does not exceed 4 times your qualifying income (4.5 times if you are 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, using savings, RRSP funds, or a non-repayable financial gift from a relative
• Your first mortgage must be greater than 80% of the value of the property and is subject to loan insurance premium. Therefore, it must be eligible for Canada Guaranty, CMHC or Sagen mortgage insurance.

Eligible Properties…

The subject property must match the following criteria, and the type of home will dictate the amount of the incentive:

• New construction (5 or 10%)
• Existing home (5%)
• New or existing mobile/manufactured home (5%)
• Single family homes
• Semi-detached homes
• Duplex
• Triplex
• Fourplex (4 units is the maximum the property can have)
• Town houses
• Condominium units
• Mobile homes
• Must be a full-time owner-occupied property. Can not be a cottage or investment property.

The incentive is kind of like a second mortgage on your home. You can apply for the incentive through your mortgage broker and lender, who will submit the package for you.  To learn more about this program, or for any other mortgage questions, please feel free to contact me. And good luck with the house hunting!