As a first-time homebuyer, there are tons of steps to take to making sure you are prepared for home ownership. If you are in the beginning stages of the home buying process, check out our other posts about what you need to know as a first-time buyer and how to financially prepare for purchasing your first home. In this article, we want to share the details of a financial incentive for Canadian first-time home buyers. Read on to learn all about the CMHC First-Time Home Buyer Incentive and what it means for you!
What It Is
The Canadian Mortgage and Housing Company (CMHC)’s First-Time Home Buyer Incentive allows first-time buyers an easier opportunity to purchase a home in Canada. The basis of the program is that a qualified buyer can apply to receive a shared equity mortgage. After being approved, you can borrow 5% to 10% of the price of the home, helping with the downpayment and lowering your monthly mortgage payment. The government then shares in both the upside and downside of the market. Repayment is based on the current home’s value, so if the home’s market value increases or decreases, you repay 5% or 10% of that price point. This allows first-time homebuyers the ability to put more money down on their initial payment, meaning a smaller mortgage repayment schedule.
In summary, the First-Time Home Buyer Incentive is like a second mortgage on your home, but does not factor into your monthly mortgage repayment schedule or into your mortgage insurance, which is required to receive the incentive.
There are a few requirements to be eligible for the First-Time Home Buyer Incentive.
Like the name suggests, you must be a first-time buyer! The government qualifies first-time homebuyers in the following ways:
- The buyer has never purchased a home before
- The buyer did not occupy a home owned by themselves or their current spouse or common-law partner within the last four years
- The buyer recently dissolved a marriage or common-law partnership (even if the other first-time home buyer requirements don’t apply)
There are also certain criteria that must be met outside of qualifying as a first-time buyer. Eligibility requirements for the First-Time Home Buyer Incentive include:
- Total annual qualifying income below $120,000
- Current loans and borrowings are less than 4 times the qualifying income
- Buyer is a Canadian citizen, permanent resident, or non-permanent resident authorized to work in Canada
- Buyer meets the minimum down payment requirements with accessible and traditional funds
How to apply
Once you have been pre-approved for your mortgage and have found the home of your dreams, double-check that you are eligible for the First-Time Home Buyer Incentive. If everything is good to go, the application process is pretty straightforward. There are two application forms to fill out. Once complete, these forms should be returned to your lender. They submit the application on your behalf.
The final signed copy of the shared equity mortgage package goes to your solicitor to keep for you. Upon acceptance, call FNF Canada at 1.855.844.4535 for activation! This should be done at least two weeks before you close on the house.
To access the forms, go to the First-Time Home Buyer Incentive website and find the application section!
If the First-Time Home Buyer Incentive is available and beneficial to you, it is a great government program to help new home buyers make their first home affordable.
Where to Start Your Home Search
If a first home is in your future, the biggest thing on your mind is finding THE home. With so many places to look, and the uncertainty of how in-person contact will be handled down the road, the home search process may seem daunting. At Sweetly, we understand the time, energy, and occasional stress that go along with purchasing a home. We have implemented a unique model of real estate purchase and sale that delivers a sweeter way to find a home.
When you sign up as a buyer with Sweetly, you can provide the characteristics you’d need, love, or dream of in a property. Then, you receive notifications each time a home matching your criteria comes available for purchase. Customize by features, price, and location to save yourself time wading through incompatible listings.
Or get a free customized list of properties tailored to your needs and wants by completing our buyers' profile survey here.
Our team at Sweetly love delivering the perfect properties to individuals, couples, and families. Our realtors work with each of their clients on a case-by-case basis. If you’re ready to take on a new way of real estate, we’re you’re go-tos. If you’d rather find your first home the traditional route, we will make the experience all that it’s meant to be! We are also happy to work with you on answering questions about your financial options and recommending the top real estate professionals in Edmonton.
To begin the path to first-time home ownership in Edmonton, contact us at Sweetly Real Estate. We practise a new system of real estate focused on the client. With new properties that match your criteria delivered straight to your email inbox, you’ll never miss a “perfect property” again. To begin the process, complete our buyer’s form or give us a call at 780.477.9338.