The federal government launched the new First-Time Home Buyer Incentive (FTHBI). The program aims to make the process of buying a home in Canada’s hottest real estate markets a bit easier for millennials. Applications are now open and you have until Nov. 1, 2019, to get yours in.
Canadians looking to qualify for this program need to meet a few requirements. In order to receive up to 10 per cent of the cost of a new home, first-time homebuyers must have a household income of less than $120,000. This incentive must be paid back within 25 years or whenever the home is sold.
Sadly, if you’re looking to purchase property in a city like Vancouver or Toronto, it won’t be a house. Pricing in these markets is competitive and the cost of a home is steep. In July 2019, the average price of a home in Vancouver was $826,165 and in Toronto, $982,427, Bloomberg reports.
The mortgage of a property cannot exceed more than four times the maximum household income of $120,000, which caps out at $480,000. This means the average price of a home available to be purchased through this program will be between $500,000 and $600,000, depending on the size of your down payment.
If a family is looking to purchase a $500,000 home with a $25,000 down payment, this program could save them as much as $286 per month or more than $3,430 a year. This statistic will change depending on the type of home purchased and in which market it is bought.
After completing and signing the application documents, take them to your lender. Your lender will submit these documents on your behalf. Once processed and accepted, applicants must call the FTHBI (1-833-974-0963) and provide the name of their lawyer or notary and their information.
Keep in mind that the federal government has increased the RRSP withdrawal amount from $25,000 to $35,000. Additionally, the Shared Equity Mortgage Providers Fund (SEMP) has been created to help Canadians own homes in a more affordable way.
Courtesy: Toronto Storeys