First-Time Home Buyers' Incentive Program
September 25, 2019
In this year’s Budget, the federal government announced the creation of a program — the First-time Home Buyers’ Incentive, or FTHBI, to provide assistance to individuals seeking to enter the housing market. Under that FTHBI, the Canada Mortgage and Housing Corporation (CMHC) (an agency of the federal government) will add a specified amount to the down payment made on a home purchase by a qualifying buyer, with the effect of reducing the amount of the monthly mortgage payment required of the new home owner.
When the program was announced as part of the Budget, few details were provided, and those details have been released on a piecemeal basis throughout the year. The goal was to launch the FTHBI on September 2, 2019, although the program website indicated that such launch date was contingent on “unforeseen circumstances”.
The FTBHI website now indicates that the program will launch as scheduled on September 2. The federal government has set up an information line for the program, which is now live, and the toll-free number for that information line is 1-877-884-2642. As well, applications for the FTHBI should be available on the program website on September 2. Finally, the website has been updated to include a “live training” component for which interested individuals can register, and that registration site is available at http://www.cvent.com/events/first-time-home-buyer-incentive-live-training/event-summary-f4e28738d84b4077acbadb261c42f3f8.aspx.
The main features of the FTHBI have not changed, and remain as follows:
To qualify for the program, applicants must generally be Canadian residents who have not owned and occupied a home within the previous four years. Where an applicant qualifies for the FTHBI, CMHC will provide additional funds to augment the applicant’s existing down payment. The amount of those additional funds is 5% or 10% of the purchase price, depending on the type of property purchased. Specifically, the incentive by property type is:
- 5% for a first-time buyer’s purchase of an existing resale home; or
- 5% for a first-time buyer’s purchase of a new or re-sale mobile/manufactured home; or
- 5% or 10% of a first-time buyer’s purchase of a newly constructed home.
The total borrowing amount (first mortgage plus incentive amount) is capped at four times the applicant’s annual income. Since the program is available only to those having an annual income of up to $120,000, the maximum total borrowing amount would therefore be $480,000.
Any funds advanced under the program will become a second mortgage on the property. No interest is charged and no regular payments (i.e., mortgage payments) are required on such funds.
Participants in the program are required to repay the incentive amount after 25 years, or when the property is sold, whichever is earlier. Participants can also repay the incentive amount earlier without incurring any pre-payment penalty.
More details of the FTHBI including, as of September 2, the application form, can be found on the FTHBI website at https://www.placetocallhome.ca/fthbi/first-time-homebuyer-incentive.