First time home buyer incentive
It’s actually happening. Canada’s First-Time Home Buyer Incentive (FTHBI) comes into effect today and it will make it a whole lot easier for young people to buy homes. Applications are officially being accepted as of today and will close on Nov. 1, 2019.
The program was imagined specifically to help young people buy their first homes without having to incur crippling monthly mortgage payments. FTHBI was introduced by the Liberal Government in their 2019 budget. As of now, the government will be absorbing five percent of mortgage payments on homes that already existed and 10% on new homes. Therefore, you can decrease your monthly payments without having to increase your down payment.
This means that if you are buying a $500,000 home, this new incentive could save you $286 per month and more than $3,400 per year.
However, the money put forth by the government must be repaid after 25 years or if the property is sold. The total funding available is $1.25 billion over the course of three years. If the property is sold at a higher value than it was bought, the government will be taking a cut. If the value has declined, the government will take a hit. Naturally, it’s not as easy as simply buying a home and waiting for the government’s assistance to kick in. There is a little bit of red tape you should be aware of.