What is the First-Time Home Buyer’s Incentive?

Officially launched in September, the First-Time Home Buyer’s Incentive was created to help qualified first-time home buyers reduce their monthly mortgage payments. Overall, the First-Time Home Buyer’s Incentive was created to make owning a home for the first time a reality.

So, how does the First-Time Home Buyer’s Incentive actually work?

The incentive is not interest-bearing and does not require ongoing payments. The incentive helps to create a more affordable monthly mortgage payment for the first-time home buyer. The Government of Canada will offer incentives for:

  • 5% of a first-time buyer’s purchase of a re-sale home
  • 5% or 10% for a first-time buyer’s purchase of a new construction

It is important to remember that the first-time home buyer will need to repay the incentive. The first-time home buyer can repay the incentive in full at any time — after 25 years or if the property is sold (whichever happens first). The repayment of the incentive is based on the property’s current fair market value times the incentive percentage amount:

  • If they received a 5% incentive and the value of the home increased to $300,000, the payback would be $15,000
  • If they received a 10% incentive and the value of the home decreased to $150,000, the payback would be $15,000

How do you know if you actually qualify for the First-Time Home Buyer’s Incentive?

Are you:

  • A Canadian citizen, permanent resident or a non-permanent resident who is legally authorized to work in Canada
  • Have a maximum qualifying household income of $120,000 per year
  • A least one borrower is a first-time home buyer

Additionally, a first-time home buyer can come in many different forms. You are a first-time home buyer if:

  • You have never purchased a home before
  • You are experiencing a breakdown of a marriage or common-law partnership
  • You did not occupy a home that you or your current spouse or common-law partner owned, in the last four years

For more information on the First-Time Home Buyer’s Incentive, please click the button below:

Will the First-Time Home Buyer’s Incentive Work?

During the 2019 Federal Election, the First Time Home Buyer’s Incentive was called into question by the Liberal and Conservative Parties. Specifically, both parties were looking to fully implement the First-Time Home Buyer’s Incentive, as well as, expand the incentive to better reflect the current market conditions.

The Liberal Party’s Platform promised to expand the Incentive to provide more help to communities in the greater Toronto, Vancouver, and Victoria regions by allowing homes valued at up to $789K to qualify. It is clear that this Incentive would better reflect the realities of trying to purchase a home in the GTA. The issue is that the Liberals were elected as a minority government. The Liberal Party will need to negotiate support from another Party to allow for a change in the First-Time Home Buyer’s Incentive.

Without the First-Time Home Buyer’s Incentive reflecting the reality of home prices in more popular areas, first-time home buyers who need to access the First-Time Home Buyer’s Incentive will need to move to areas outside of the GTA and possibility, farther away from work, family and friends.