How The First-Time Home Buyer Incentive Can Help You Achieve Home Ownership

What The First-Time Home Buyer Incentive Is, How It Works, And Who Can Use It

What Is The First-Time Home Buyer Incentive?

This new program is a shared equity mortgage with the Canadian government. It is designed to help Canadians become homeowners by offering a loan of 5% or 10% of the home’s purchase price put towards the down payment. This allows the borrower to fund the down payment upfront without paying the full amount of cash, thus keeping the down payment large enough to get lower mortgage rates.

Here Is How It Works

Since the government has an investment in your home, it shares in both increases and decreases of the property value. If your home’s purchase price is $200,000, you receive a 5% incentive amount of $10,000. If your home value increases to $300,000 your payback would be 5% of the current value or $15,000. If your home decreases to $150,000 your payback would be 5% of the current value, which would be $7,500. The home buyer must repay the Incentive in full either in 25 years or when they sell the house, whichever comes first, with the final amount being determined by the value of the house at the time when either of those occur.

You Count As A First-Time Home Buyer If You:

• Have never purchased a home
• Have not lived in a home that was owned by yourself or spouse/common law partner in the last 4 years
• Have recently experienced a breakdown in your marriage or common law relationship.

You Are Eligible If Your: 

• Total annual qualifying income that doesn’t exceed $120,000
• Total borrowing is no more than 4 times your qualifying income
• Status is as a Canadian citizen, permanent resident, or non-permanent resident authorized to work in Canada
• Minimum down payment requirements are met with traditional funds

How To Take Advantage Of This Incentive

The First-Time Home-Buyer Incentive is a wonderful opportunity for first-time buyers to get into the market, but there are some things to remember. With this incentive, it will be like having 2 mortgages to close, you will need an appraisal to determine the market value of your home, you may incur additional costs with property insurance, and you may want to switch or refinance your first mortgage later. All of these may make the process more complex and the best way to manage your mortgage and Incentive is to partner with a trusted Realtor®. Realtors® are always an asset, but when it’s your first property, the experience and guidance of a Calgary Realtor® will be invaluable.

Talk To The Mel Star Team In Calgary, Alberta, To Find Your First Home

Take advantage of the wonderful opportunity of The First-Time Home Buyer Incentive and work with a Realtor® who understands the needs of first-time home buyers as they search for the perfect property. The Mel Star team has over 40 years of experience and can guide you through the entire process from pre-approval and property search to negotiating and closing on the purchase of your first home. The Mel Star team will help you navigate The First-Time Home Buyer Incentive and ensure that your biggest investment to date is well-protected. If you are ready to become a first-time home owner, contact the Mel Star team by calling 1-403-861-9944 or by filling out the online contact form.

FAQ

Q: How do I apply for the Incentive?
A: You need to be pre-approved for a mortgage and fit the eligibility requirements. You need to find the home you would like to buy before you apply for the incentive and you will need to have it appraised. You’ll then have to fill out 2 application forms and present them to your lender who will submit them. Give the final signed copy of the shared equity mortgage package to your lawyer and wait for acceptance before activating your incentive once you’ve received acceptance. Your Realtor® will assist you through this process and can address any questions or concerns you have.

Q: Why should I use a real estate agent for buying a home?
A: A good Realtor® will represent you during the home buying process. A real estate agent should do the following for you when buying a home:

• Book showings
• Provide you with search tools or search for properties on your behalf
• Represent you well in possible multiple offer scenarios
• Keep a calm head during negotiations
• Diligently navigate contracts and closing

Q: I’m just beginning to look at buying a home in Calgary. Where should I start?
A: When buying a home in Calgary, you should start by checking your credit score and determining an approximate budget. Then, come talk to the team at Mel Star to discuss your options with us and we’ll help you start finding houses. If you want to start looking at homes and check out our featured listings here.