First Time Home Buyer Incentive (FTHBI) – All You Need To Know

Effective September 2, 2019, the Government of Canada had introduced the First Time Home Buyer Incentive (FTHBI) to help qualified First Time Home Buyers (FTHB) across Canada to purchase a home, making homeownership more affordable by reducing their monthly mortgage payment without increasing their down payment.

This is good news for homebuyers because the FTHB Incentive is considered a Shared Equity Mortgage (SEM) where the Government of Canada has a shared interest in the borrower’s property value.

This program is available through the default insurers; Canada Mortgage Housing Corporation (CMHC), Genworth and Canada Guaranty.

Homebuyers will receive FTHB Incentive in the form of an interest-free loan towards their down payment:

• 5% for the purchase of a resale property OR
• 5% or 10% for the purchase of a new construction home

Does it sound good so far?

Well, you might want to sit down for this. The loan has no monthly payment.

Nevertheless, it is a loan. So how and when would you repay the FTHB Incentive to the government if you wish to clear this loan?

The repayment amount will be based on fair market value to be determined at the time of repayment, which can be one of the following two scenarios:

Repayment will be required when the property is sold or at the end of the 25-year term, whichever happens earlier.

Voluntary repayment of the full incentive can be made without any prepayment penalties.

If you have been trying to buy a house for a long time, this could be the answer to your situation. Feel free to contact us and we’ll be happy to qualify you for this program or other solution to finally be a homeowner!

Program Eligibility (the fine prints):

• The applicant must be a Canadian Citizen, Permanent Resident or Non-Permanent Resident who is legally authorized to work in Canada
• At least one applicant must be considered an FTHB based on the qualifying criteria.
• The property must be owner-occupied and located in Canada
• Applicants must contribute the minimum required down payment from traditional sources, i.e. 5% of the purchase price
• Default insurance premiums will be calculated based on the purchase price less the applicant’s own down payment and the FTHB incentive amounts
• The application must be submitted on or after September 2, 2019, and the closing date must be on or after November 1, 2019
• Only eligible for High Ratio mortgages (greater than 80% Loan-to-Value)
• The applicant’s annual qualifying household income must not exceed $120,000
• The combined mortgage loan amount and incentive cannot exceed four times the total annual qualifying income