The First-Time Home Buyer Incentive Program was created and administered by the Canadian Government as a way to help the first time home buyers navigate the home buying market with an interest-free loan. The program is designed to top up the down payment by 5% on the majority of homes and 10% on brand new home models. The loan is not due back until the house is sold or after about 25 years. There are several benefits to the program and it’s important to learn more about it and whether you apply. Read on to learn more about the first-time home buyer program and how it’s making homeownership far more affordable below.
How It’s Helpful
Higher down payments can result in a lower overall mortgage price by reducing monthly payments. The program does not have interest or regular payments and can often be repaired without you having to pay any prepayment penalties. When repaying the loan, the home’s value is calculated on the overall value of the home based at that time (5% for most homes and 10% for newer homes). This means that the home buyer is partially protected if there is a significant drop in the market.
Who Is the Program For?
The incentive is most commonly for the following:
- First-time home buyers
- Individuals overall household income has to be under $120,000
- The down payment must be at least 5% or more
- The down payment would have to be less than 20%
Is It Feasible In All Housing Markets?
While there are several home buyers across Canada that can benefit and qualify for the incentive program, some markets may be more challenging to find a home than others. These home buyers may find it exceedingly difficult to find a home that sells for a price that qualifies from the incentive. For example, the Toronto housing market is one where the FTHBI program may not qualify. The ability to use the program is largely based on each city and the income, how much of the down payment the prospective buyer is putting down and the price of the home they want to purchase.
Is The FTHBI Worth It?
Depending on the market and whether you qualify, it’s important to consider whether the FTHBI is right for you or too much of a risk. For prospective buyers that will be unable to pay the 5% down payment, the financial risk may be too high and not worth investing your time in. Even if you’re able to afford and pay the down payment, you could be stuck with rising interest rates and maintenance costs. It’s also important for buyers to be aware of any appraisal, legal and mortgage refinancing fees that could come later on.
The team at Mortgage Makers is committed to finding prospective home buyers the best mortgage rates in Edmonton. If you’re deciding to buy a home, you can count on us to provide you with the right knowledge and guide you through this exciting process to find a rate that fits your needs. Contact us today to learn more