First-Time Home Buyers Incentive
What is it?
A program by the Canadian Government to help first-time home buyers their first home! The Canadian government will contribute 5% to your downpayment, or 10% on newly built homes. The loan is interest free and doesn't have to be repaid till 25 years later, or until you sell the home.
How does it help? (2)
A higher downpayment means lower monthly payments. The 5-10% contributed to downpayment fluctuates by current market rates. If the market is dropping, you are partly protected because the amount due will mostly drop in value as well.
- Maximum combined income of $120,000
- Initial downpayment must be 5%+
- Downpayment must be less than 20%
- Must be a first time homebuyer
- Total borrowing limit cannot exceed 4 times your income
Scenario Jim has an annual income of $90,000/year.
Jim will be eligible for the first-time home buyer's incentive if he purchases a newly built apartment for $360,000. (Maximum of 4x Jim's income). Jim has the 5% minimum downpayment requirement of $18,000.
Note* Both situations use a hypothetical situation of 3% interest, and a 30 year amortizations
Option #1: Not using the First-Time Home Buyer's Incentive
Downpayment (%5): $18,000
Monthly Payments: $1441.89
Option #2: Using the First-Time Home Buyer's Incentive
Downpayment (%15): $54,000
Monthly Payments: $1290.11
Savings of $151.78/Month, or $1821.36/Year