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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.


Requirements

- 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

Purchase: $360,000

Downpayment (%5): $18,000

Monthly Payments: $1441.89


Option #2: Using the First-Time Home Buyer's Incentive

Purchase: $360,000

Downpayment (%15): $54,000

Monthly Payments: $1290.11


Savings of $151.78/Month, or $1821.36/Year