The Federal Government Announces an Incentive for First-Time Buyers
On September 2, 2019, the federal government launched a new measure to improve access to homeownership: the First-Time Home Buyer Incentive Program (FTHBI). The purpose of this program is to help middle-class families buy their first home: while reducing their monthly mortgage payments without having to increase the amount of the down payment they need to save.
5% or 10% shared equity mortgage
The Incentive would allow eligible first-time homebuyers, who have the minimum down payment for an insured mortgage, to apply to finance a portion of their home purchase through a form of shared equity mortgage with the Government of Canada. Consequently, for the purchase of an existing home, an Incentive amount of 5% is available. Also, for the purchase of a newly constructed home, an Incentive amount of 5% or 10% is available to qualified buyers. The larger Incentive amount is intended to help encourage the home construction needed to address some of the housing supply shortages in Canada. This is particularly evident in our largest cities.
Reduce Monthly Mortgage Payments
The First-Time Home Buyer Incentive Program (FTHBI) enables first-time homebuyers to reduce their monthly mortgage payment, without increasing the amount that they must save for a down payment. Furthermore, no on-going repayments are required, the Incentive is not interest-bearing, and the homeowner can repay the Incentive at any time without a pre-payment penalty. The shared equity mortgage means that the government shares in the upside and downside of the property value.
Do you meet the requirements as a First-time Home Buyer?
You are considered a first-time homebuyer if you meet one of the following qualifications:
- you have never purchased a home before
- you’ve recently experienced a breakdown of a marriage or common-law partnership
- in the last 4 years, you did not occupy a home that you or your current spouse or common-law partner owned
Source: National Housing Strategy