The First Time Home Buyer’s incentive is a helpful incentive program for first-time homebuyers in Canada who are looking to buy a new home and need financial help in acquiring it. You must know that FTHBI has different incentive programs that can help you in various ways.
Before you apply for the First-Time Home Buyer Incentive, this is what you need to know!
1. Different Incentives Programs
The FTHBI offers a few incentive programs to motivate and encourage Canadians to buy and move into a home. Here are 4 of them:
Land-Transfer Tax Rebate
When you buy land in Canada, you must pay land transfer taxes.
As a first-time homebuyer, you could be eligible for a rebate on land transfer taxes, however, these rebates are subject to some exceptions. You must be a minimum of 18 years of age and have never owned a home or an interest in a home/property. You may be eligible to get approximately up to $4000 in tax returns with this incentive program when these exceptions apply to you.
First-Time Home Buyer Tax Rebate
You may have access to a number of tax breaks if you are buying your first home in Canada. If you meet the required conditions, you may receive up to a $750 rebate under this incentive program. Isn’t this amazing?
GST/ HST New Housing Rebate
The GST/HST New Housing Rebate is a rebate for the federal portion of taxes that could relieve you from some financial stress when buying your first home. Each province in Canada may have a different structure of rebates that reimburse the buyers a portion of the provincial component of the costs.
This rebate can however only be used in newly built homes, a new construction of a home that you own the land on, or for sizable renovations to an existing home.
CMHC Insurance for First Time Home Buyers
The 4th incentive is the Mortgage Default Insurance program a.k.a CMHC Insurance. It basically allows all first-time homebuyers to buy a home with a downpayment of as little as only 5%. This incentive is supportive to anyone who may not have a full 20% of the down payment saved up for the home. This Mortgage default insurance is offered by the Canada Mortgage and Housing Corporation (CMHC) and other private insurers and protects them in case you cannot make your payments.
The minimum down payment for the Mortgage Loan Insurance depends on how much the property home is listed for. If the property costs less than $500,000, the minimum down payment is 5%. If the home costs more than $500,000 but less than $1,000,000 then for the first $500,000 you need a downpayment of a minimum of 5% and then the rest of the amount 10%. Homes over $1 Million do not qualify for this incentive.
2. Not All Qualify
There are some restrictions and criteria to who is eligible to apply for these above noted First Time Home Buyer Incentives. You may qualify if these apply to you:
- You or your partner are a first-time homebuyer.
- You are a Canadian citizen, permanent resident, or non-permanent resident authorized to work in Canada.
- Your total annual qualifying income doesn’t exceed over $120,000.
- Your total borrowing amount is no more than 4 times of your qualifying income.
- You meet the minimum down payment requirements with traditional funds (savings, withdrawal/collapse of an RRSP, or a non-repayable financial gift from a relative/immediate family member).
3. Some Incentives Will Need To Be Paid Back
The incentives you receive as loans must be paid back to CMHC sooner or later. Since the FTHBI program is a shared-equity mortgage program run by the government, that means that you will share any gains and losses with the government. In other words, their program to assist you is government investment in the first-time home buying project as well. The repayment timeline is 25 years, assuming that the prices of housing have gone up, your home will be worth more than the initial price. The percentage of CMHC loan you qualified for (5-10%) must be paid back of the present market value of your home when you are selling it.
4. Plan Ahead
Since not all First Time Home Buyer programs are not all free money, you must think twice and plan ahead if you are planning to buy your first home! If you are planning to buy your first home in Kleinburg, Vaughan, Toronto, or anywhere in Ontario and need someone that you can rely on and trust along the journey, then contact Salerno Realty Inc. There is no cost to you in having a realtor from Salerno Realty Inc as your buyer representative when you are buying your first home. It’s free!
