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New Rules coming In Place for FTHBI program

Updated: Nov 16, 2022

Federal Government's Home Buyer Incentive Tweaks Benefiting Toronto, Vancouver and Victoria

The federal government is making changes to the First-Time Home Buyer Incentive for prospective homeowners in some of Canada’s priciest real estate markets.

The changes will allow eligible buyers in Victoria, Vancouver and Toronto to purchase a home worth up to 4.5 times their household income, up from the current cap of four times annual income.

It also raises the maximum household income threshold to $150,000 from $120,000, a move the feds say will make first-time buyers in those cities eligible to buy a home for as much as $722,000 from the current $505,000.

It works like this:

  • You receive a 5% incentive of the home’s purchase price of $200,000, or $10,000. If your home value increases to $300,000 your payback would be 5% of the current value or $15,000.

  • You receive a 10% incentive of the home’s purchase price of $200,000, or $20,000 and your home value decreases to $150,000, your repayment value will be 10% of the current value or $15,000.

Just as the name implies, this incentive is for first-time homebuyers. You’re considered a first-time homebuyer if:

  • you have never purchased a home before

  • you did not occupy a home that you or your current spouse or common-law partner owned in the last 4 years (the 4-year period begins on January 1 of the fourth year before the Incentive is funded and ends 31 days before the date the Incentive is funded)

  • you have recently experienced the breakdown of a marriage or common-law partnership (even if you don’t meet the other first-time homebuyer requirements)

Here’s an example:

Anita wants to buy a new home for $400,000 and has saved the minimum required down payment of $20,000 (5% of the purchase price).

Under the First-Time Home Buyer Incentive, Anita can apply to receive $40,000 in a shared equity mortgage (10% of the cost of a new home) through the program.

This lowers the amount Anita needs to borrow and reduces the monthly expenses.

As a result, Anita’s mortgage is $228 less a month or $2,736 a year.

Ten years later, Anita sells the home for $420,000. The Incentive will need to be repaid as a percentage of the home’s current value.

This would result in Anita repaying 10%, or $42,000 at the time of selling the house.

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