Personal Finance

Canada FTHB Incentive Eligibility, Amount & Repayment Structure: All You Need to Know!

Welcome to our detailed guide on Canada’s First-Time Home Buyer Incentive (FTHBI), a groundbreaking shared-equity mortgage program initiated by the Government of Canada. Our comprehensive coverage aims to provide prospective homebuyers with an in-depth understanding of the program, from eligibility criteria to application procedures.

Understanding Canada’s First-Time Home Buyer Incentive (FTHBI)

Eligibility Criteria

The FTHBI is tailored for first-time homebuyers with an annual income of $120,000 or less. Striking a balance, the sum of the insured mortgage and the incentive amount cannot exceed four times the participant’s qualified annual income, ensuring responsible borrowing.

Incentive Amount

For existing homes, the incentive is set at 5% of the property value, providing a substantial boost to affordability. In the case of newly constructed homes, buyers can choose between 5% or 10% of the property value, encouraging investment in new developments. Mobile or manufactured homes also qualify for a 5% incentive.

Repayment Structure

The FTHBI operates as a shared-equity mortgage, with an interest-free loan repaid upon property sale or within 25 years of purchase. The government shares in property value appreciation/depreciation up to 8% p.a. This shared-equity model aims to mitigate financial risk while supporting homebuyers.

FTHBI Incentive Eligibility

First-Time Homebuyer Status

To qualify, participants must be first-time homebuyers, fostering homeownership among those who haven’t owned a property before.

Income Limit

An income limit of $120,000 ensures the incentive aids individuals or families with moderate income, promoting homeownership without causing financial strain.

Mortgage and Incentive Amount Limit

A prudent limit caps the combined total of the participant’s insured mortgage and the incentive amount at four times their qualified annual income, promoting responsible borrowing.

How Much is the Incentive Amount?

Existing (Resale) Homes

For existing homes, the incentive is a valuable 5% of the property’s value, reducing monthly mortgage payments.

Newly Constructed Homes

Newly constructed homes offer a choice between 5% or 10% incentives, incentivizing investment in the burgeoning market.

Mobile/Manufactured Homes

Similar to existing homes, the incentive for mobile/manufactured homes stands at 5%, fostering inclusivity.

How to Repay the Incentive?

Repayment Timeline

An interest-free loan is repaid upon property sale or within 25 years, prioritizing flexibility for homebuyers.

Repayment Amount

Repayment is based on the property’s current value, reflecting the shared-equity nature of the incentive.

Shared-Equity Mortgage

The government shares in property value changes, ensuring both benefits and risks are shared, with a maximum gain or loss of 8% p.a.

Combining with Other Programs

FTHBI can be combined with federal programs like the Home Buyers’ Plan, enhancing financial flexibility.

Applying for FTHB Incentive

Pre-Approval for a Mortgage

Begin by obtaining pre-approval for a mortgage to establish eligibility and borrowing limits.

Finding a Home

Explore homes within your budget that suit your needs.

Required Forms

Complete essential forms: “Shared Equity Mortgage Information Package” and “Shared Equity Mortgage Attestation and Consent Form.”

Submission by Lender

Your lender submits the forms, ensuring accuracy in the application process.

Approval and Activation

Upon approval, activate the incentive at least two weeks before your closing date by contacting FNF Canada.

In conclusion, Canada’s First-Time Home Buyer Incentive empowers first-time homebuyers by offering a structured, accessible path to homeownership. Navigate the process with confidence, combining our detailed guide with expert advice for a seamless experience. Happy home hunting!​