How to Use the First-Time Home Buyer Incentive

How to Use the First-Time Home Buyer Incentive

If you’ve never owned a property before and you’re looking to buy your first home in Calgary—or anywhere in Canada—you’re in luck! On September 2^nd, 2019, the Government of Canada will be rolling out the First-Time Home Buyer Incentive (FTHBI). You can use this and other provincial rebates to help you buy the home of your dreams in Calgary, Alberta.

Statistically speaking, young Canadians are struggling to find affordable housing in and around the country’s most populated cities, which makes them the smallest demographic of homeowners. The incentive is designed to help young people buy their first home without struggling with their mortgage payments.

What Is the First-Time Home Buyer Incentive?

According to the government website, the FTHBI “helps qualified first-time home buyers reduce their monthly mortgage carrying costs without adding to their financial burdens.” In other words, your monthly mortgage payments will be more affordable, even if you’ve only saved the minimum down payment. Borrowers should consider the FTHBI incentive as a type of second mortgage on the property without regular principal payments.

Who Qualifies for this Incentive?

There are very few eligibility requirements for the home buyer incentive. These are:

• You must be a Canadian citizen or resident (permanent and non-permanent)
• You must already have the minimum down payment—calculate how much you can afford with our easy mortgage calculator!
• A maximum of $120,000 of yearly qualifying income (i.e. annual salary, investment income, or rental income)
• Your borrowing limit cannot exceed four times your income amount
• At least one member on the application needs to be a first-time home buyer.

Want to find out if you qualify? You can take this easy eligibility calculator!

If your household meets all of the eligibility requirements, you can apply for a shared equity mortgage from the Federal Government for 5 or 10 % (10 for a new construction). This means that your property value (both the upside and the downside) is shared.

What kind of property can you buy with this incentive?

• New construction, resale, and mobile/manufactured residential properties
• Residential properties of no more than four units (duplex, triplex, etc.)
• Condominiums or townhouses

Note: The home must be in Canada and should be available all year round and not used as a rental unit. In other words, in order to be eligible for the FTHBI, the applicant must find a residential property that they intend to live in full-time.

How Do Home Buyers Benefit from this Incentive?

The First-Time Home Buyer Incentive was designed to make it easier for homeowners to afford their mortgage payments. By reducing the monthly mortgage rate without increasing the down payment amount, homeowners will have more housing options available to them. Fortunately, the FTHBI does not accrue interest. Canadians looking to buy their first home should still pursue other financial sources, such as savings, RRSPs (which first-time home buyers can use to withdraw funds without paying any penalties), and monetary gifts from family. If you apply for the FTHBI, you may not have to save as much money to buy a house. 

How Do You Apply?

If you meet the eligibility requirements for the FTHBI incentive, fill out the application form—which will be available on September 2^nd—and bring it to your bank or lender; they will submit your documents. After your documents are accepted, call 1.833.974.0963 to activate the FTHBI payment. You also have to provide your lawyer or notary’s name no later than two weeks before the closing date.

What About Repayment?

You only need to pay back the sum of the incentive after 25 years or when you sell your house, depending on which comes first. If you can’t afford the repayment at the time that it’s due, the program administrator will work with you to come up with a repayment solution. Bear in mind that there are other costs involved with the FTHBI program, namely additional legal fees for closing a second mortgage and applicable appraisal fees.

Are there Other Rebates or Incentives as a First-Time Home Buyer?

As someone buying their first home in Calgary, you can take advantage of many provincial and federal incentives, tax credits, and programs to help you spend less or get a portion of your money back. Here is a brief list of available grants for first-time home buyers in Alberta:

• First-Time Home Buyer’s Tax Credit. Get up to $5,000 in a non-refundable income tax credit on a qualifying house purchase if you’re a first-time owner.
• Home Buyers’ Plan. Withdraw up to $35,000 from your Registered Retirement Savings Plan (RRSP) for the purchase or construction of a house for you or a disabled relative.
• PEAK Program. Designed for middle-income households, the Public, Essential, and Key Workforce program helps qualifying individuals with their down payments (up to 5% of the purchase price).
• Residential Access Modification Program (RAMP). Low-income Albertans with disabilities can apply for grants to modify their homes for better accessibility.  
• Attainable Homes Calgary. This program offers down payment assistance to low-to-moderate income residents of Calgary. The only catch is that first-time home buyers are obligated to purchase their home in select housing developments.
• Our Heroes Program. Are you a first responder or teacher? You’re eligible for 7% cashback on our commission of your home purchase. You don’t need to be a first-time home buyer to meet this requirement.

Let Calgary House Finder Help You Discover the Home of Your Dreams!

Whether you’ve never owned a house, or you’ve been in the same residence for 20 years, Calgary House Finder has the resources and knowledgeable staff to help you find the home you’ve been looking for in the price range you can afford. Explore our listings, or contact us today!