Are You a first time Homebuyer?

In September 2019, the Canadian federal government launched a program called the First Time Home Buyer Incentive (FTHBI). This is a wonderful program that will allow someone who has never owned a house before to become a homeowner. It also will help someone who is suddenly single through divorce or common-law breakup. The basis is that the government will provide up to 10%, although it is usually about 5%, of the purchase price as the down payment. That means there is less mortgage to finance, making the whole deal affordable. Here is a summary:

• 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

There are some criteria, of course.
• You need to have not owned, or co-owned, a house in the previous four years.
• Annual income (including salary, investments, rental income, etc.) is less than $120,000.
• You are borrowing less than four times your qualifying income. So, if you earn the maximum of $120,000 a year, you can borrow up to $480,000 for the home. However, if only earn $50,000 annual income, you can only borrow a maximum of $200,000, and so forth.
• You still need to have some money toward the down payment because the FTHBI won’t cover the full amount.

How It Works
If you qualify, the government shares your mortgage. That is, you make the payments and when you sell the house (or after 25 years, whichever is sooner), you pay the government back the amount of the incentive money they gave you, plus a percentage of the gain or loss in the overall equity. If the house increased in value when you sell it, you will be required to pay back more than you borrowed. However, if the house is worth less when you sell, you will pay back less than you borrowed.

The Basic Idea
The plan is that a first time home buyer will have lower mortgage payments. The government is willing to do this for a share of any profits when the house is resold.

All of this is pretty complex and you probably have many questions. A good place for answers is The experts at this site have spent a lot of time studying the incentive program and can help you clarify any issues. They can help you decide if this program is to your benefit or not. They will unscramble the jargon and explain the options in clear terms that you can understand.

If this is not the right program for you, they will be able to suggest alternatives. Understanding residential loans and equity value is their business. Buying a home is a major life experience and part of their job is to demystify the process for you.

They also deal with first-time home buyers on a regular basis. They have the experience to help you with any credit issues or knowing which documents you will need when you proceed with the loan and closing.