First-time Home Buyer Incentive in Canada for Residents and Non-Residents

First-time Home Buyer Incentive in Canada
First-time Home Buyer Incentive in Canada

Toronto: Do you know that in Canada, on your First-time buying of home, you can get incentives and grants? Yes, that is true! This article intends to provide you a comprehensive walk-through of the First-time home buyer incentive program. Do read and scroll to the bottom of this page to know all about the eligibility and process of availing the benefits.

First-time Home Buyer Incentive in Canada: Overview

Under the First-Time Property Buyer Incentive or FTHBI, a program run by the Canadian government, qualified buyers can get a loan for 5% or 10% of the cost of a home.

A first-time buyer’s down payment is increased by FTHBI funding, providing them more equity at the commencement of the mortgage and reducing the size of the overall house loan granted by a lender.

The loan has no interest and must be fully returned either when the house is sold or 25 years from the date it was obtained. You will have to pay back 5% to 10% of the property’s current market value, not the amount you borrowed. This is because the FTHBI is what’s known as a “shared equity” agreement, in which each participant owns a portion of the property.

The FTHBI appears to be a fantastic opportunity for beginners to receive some much-needed assistance. Indeed, it is! But before deciding the feasibility of the program for you, you really need to understand its shared equity component and the eligibility conditions.

Are you Eligible for the First-time Home Buyer Incentive in Canada?

To be eligible for the FTHBI program, you must satisfy the following conditions:

  • You must be a citizen of Canada, a permanent resident, or a non-resident with a valid work permit.
  • You or the other person with whom you are purchasing the home must be a first-time buyer.
  • For a property purchased in Census Metropolitan GTAG T A, GVAG V A, or Victoria, your aggregate yearly income must be $150,000 or less. Whereas, for a home purchased elsewhere in Canada, it must be $120,000 or less.
  • The amount of your traditional down payment must be at least 5% of the purchase price.
  • For a home in the Census Metropolitan Area GTAG T A, GVAG V A, or Victoria, you can borrow up to 4.5 times your combined qualified annual income plus the down payment. Whereas, if you buy a home elsewhere in Canada, you can only borrow up to 4 times your combined qualified annual income plus the down payment.

If you are satisfying these mentioned conditions, you will be eligible for First-time Home Buyer Incentive. Furthermore, there are few discretionary regulations of the local authorities that will be more clear to you once you read through the application process.

You have therefore determined that you might be eligible for the First-Time Home Buyers Incentive. Great! However, you must also confirm that your home qualifies.

Residential properties that are both newly built or resale apartments are eligible, such as:

  • Single-family homes
  • Semi-detached homes
  • Duplex, triplex, and fourplex
  • Townhouses
  • Condominium units
  • Mobile/manufactured home

Up to four units may be present in your house. It must be situated in Canada and be acceptable and available for year-round, full-time owner occupancy.

Calculations of First-time Home Buyer Incentive in Canada

We’re now coming to the interesting part. A few factors will determine how much you can receive from the first-time home buyer incentive. Depending on the type of property you buy, you can borrow either 5% or 10% of the price of your home.

What fraction of an incentive are you eligible for? That depends on the kind of house you’re buying. For Newly constructed properties, you can get an incentive of up to 5% to 10%. Resale homes or mobile/manufactured homes are eligible for a 5% incentive.

Let’s compute the figures. Consider that your ideal house costs $200,000 to buy. With your $10,000 in savings, you can put down 5% on a house (a minimum requirement for the incentive). As a result, you will require a mortgage to pay the remaining $190,000.

For instance, let’s say you receive a First-Time Home Buyer Incentive worth $20,000, or 10% of the price of a new build property. Your monthly mortgage payments will be reduced by about $114 a month when the total mortgage balance is reduced to $170,000.

How much a First-time Home Buyer in Canada will receive in Grants?

The grant that you will receive from this scheme depends on various factors. Majorly, the location of the property you want to purchase plays a deciding role in the amount of the grant you can receive from this scheme. Additionally, various cost and finance indices like downpayment, cost of property, amortization period, mortgage interest rate are some crucial factors in deciding the volume of grant.

To get the accurate estimation of the amount of grant you can receive, check out this Government of Canada’s FTHBI Calculator.

The FTHBI is a great initiative of the Government of Canada. This can be a great support if you are a non-resident, but are in Canada with a PR or valid work permit. Please note that this program will not help you qualify for a mortgage, but will surely reduce your home ownership cost. 

Even this is a great support when you find yourself with limited financial support and backup. So, by now, as you are clear about the scheme, move forward to own your first home in Canada today.

For more Canadian Real estate news, please visit our Canada Real Estate section.

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