Renter to First-Time Home Buyer
Monday Aug 26th, 2019
Buying your first home is a huge accomplishment that has its challenges, however; with the help of our team, we can make the process smooth for you. Some of the difficulties with buying your first home have a lot to do with financial burdens, and now Canada has just made it easier for young Canadians to buy a house with the First-Time Home Buyer Incentive Program.
Here’s what you need to know:
The incentive applies to:
The incentive applies to Canadian citizens, permanent residents, and non-permanent residents who are legally authorized to work in Canada. Borrowers must have a maximum qualifying income of $120,000 a year. Therefore, you qualify if you make $120,000 per year or less. Qualifying income relates to your annual salary (before taxes), investment income, and rental income.
You are considered a first-time home buyer if:
-You have never purchased a house before
-You have gone through a breakdown of a marriage/common-law partnership (even if you don’t meet the other first-time homebuyer requirements)
-In the last 4 years, you did not occupy a home that you or your spouse/common-law partner has owned *PLEASE NOTE: It’s possible that you or your spouse or common-law partner qualifies for the First-Time Home Buyer Incentive (if you are in a married/common-law relationship) with the 4-year clause even if you’ve owned a home.
How the Incentive benefits you:
By obtaining the Incentive, you may not have to save as much of a down payment to be able to afford the payments associated with the mortgage.
The Government of Canada provides:
-5% or 10% for a first-time buyer’s purchase of a newly constructed home
-5% for a first-time buyer’s purchase of a resale (existing) home
-5% for a first-time buyer’s purchase of a new or resale mobile/manufactured home
When to make repayment:
You can repay the Incentive at any time in full without a pre-payment penalty. You have 25 years before you need to pay it back, or if the property is sold; whichever happens first. The repayment depends on the property’s fair market value at the time of sale or at the end of the 25 years. Therefore, if you receive a 5% incentive of the home’s purchase price of $300,000, or $15,000, and your home value increases to $500,000 your payback would be %5 of the current value or $25,000.
*NOTE: If your property value goes down, you are still responsible for repaying the shared equity mortgage based on the current home value at the time of repayment.
How do I apply?
Complete and sign the application documents and take them to your lender, who will submit them on your behalf. Once processed and accepted, you must call 1-833-974-0963 to activate the FTHBI payment and provide the name of the lawyer/notary you have chosen to close your deal. You must provide your lawyer/notary information as soon as you have chosen one and no less than 2 weeks before your closing.
The program is expected to be ready to receive Incentive applications starting September 2, 2019. If approved for the Incentive, the purchase transaction must close on or after November 1, 2019.
If you have any questions about the First-Time Home Buyer’s Incentive Program, Team Piccione would be happy to answer them for you. Call/Text/Email us to help you make your dreams of owning a home a reality.