Those in Canada looking to buy their first home may wonder if any programs are available to help with home-buying costs. The good news is that the Canadian First-Time Home Buyer Incentive is available. The program’s goal is to help thousands of people buy their first home.
How the First-Time Buyer Incentive May Help
The program offers a shared equity mortgage to those looking to buy a home for the first time. A shared equity mortgage means that the government will share both the losses and gains in the home’s equity. The program works by loaning potential buyers five percent of a re-sale home’s purchase price or 10 percent of a new home’s price. This helps lower mortgage payments by several hundred dollars per month, which can make owning a home more affordable for buyers.
The loan doesn’t have to be repaid in installments, and there is no interest on the loan. It must eventually be repaid, however. When the home is sold or after 25 years, whichever comes first, the homeowners are responsible for repaying five or 10 percent of the home’s value at the time of the sale. This means that if home prices have risen, homeowners will owe the government more; if home prices fall, they may owe less.
Qualifying for the Incentive Program
The program has strict requirements for determining who qualifies as a first-time home buyer. The program has determined that the following individuals are considered first-time home buyers:
- Individuals who have never owned a home before
- Homeowners who haven’t lived in a home that they have owned in the prior four years
- Homeowners who have recently separated from their spouse or who have broken off a common-law partnership
Additionally, the following requirements must be met to qualify:
- Make less than $120,000 per year
- Have the minimum down payment of 5 percent of the home
- Borrowing less than four times the annual salary of the applicants
Those interested in the program can contact the National Housing Strategy for more information. Live training sessions and a phone hotline are available to answer any questions and to help potential home buyers get started on the application process.