The Home Buyer Incentive Explained

The Home Buyer Incentive is a government program designed to help first-time homebuyers achieve their dream of homeownership. It offers an attractive incentive to assist with your down payment, effectively reducing your overall mortgage amount and, consequently, your monthly mortgage expenses.

HERE'S HOW IT WORKS:

• First-time buyers of newly constructed homes can qualify for an incentive of 5% or 10%.

• First-time buyers of existing (resale) homes are eligible for a 5% incentive.

• First-time buyers of new or resale mobile/manufactured homes can also receive a 5% incentive.

QUALIFYING FOR THE INCENTIVE:

To be eligible for the Home Buyer Incentive, you must meet specific criteria:

• You must be a first-time homebuyer, meaning you have never owned a home.

• You must not have lived in a home owned by you, your current spouse, or common-law partner in the last 4 years.

• If you've recently experienced a breakdown in a marriage or common-law partnership, you may still qualify.

Additional qualifications depend on your income and status:

• Your total qualifying income must not exceed $120,000, or $150,000 if you're purchasing a home in Toronto, Vancouver, or Victoria.

• Your total borrowing must be less than four times your qualifying income, or four and a half times your income if you're buying in one of the high-priced cities.

• You must be a Canadian citizen, permanent resident, or a non-permanent resident authorized to work in Canada.

• You should meet the minimum down payment requirements.

ADDITIONAL COSTS: While the incentive offers valuable benefits, it's important to be aware of associated costs. These may include additional legal fees, as your lawyer is handling two mortgages—one on your behalf and one on the Government's behalf. There might also be appraisal fees to determine the repayment value of your home when the time comes, along with potential fees like refinancing or switching costs if you decide to move or update your mortgage.

REPAYMENT PROCESS: Repaying the incentive is straightforward. You'll be required to pay it back after 25 years or when the property is sold, whichever comes first. You also have the flexibility to repay it at any time without penalties. The repayment amount is based on the fair market value of your home at the time of repayment, and it corresponds to the percentage of the incentive you received. For example, if you received a 5% incentive, you would repay 5% of the current home value at the time of repayment.

It's worth noting that if you choose to port your mortgage or experience a separation during the term and wish to buy out your co-borrower, you will need to repay the incentive sooner. The Home Buyer Incentive is a valuable resource to help make homeownership more achievable and to provide a stepping stone for first-time buyers to enter the real estate market.

Content provided by Scott Westlake, Mortgage Agent Level 2, Dominion Lending Centres - FC Funding, License 10761. Each office independently owned & operated.